April’s durable goods, new home sales, and existing home sales

Widely watched reports that were released this week included the April advance report on durable goods and the April report on new home sales, both from the Census bureau, and the Existing Home Sales Report for April from the National Association of Realtors….this week also saw the release of Chicago Fed National Activity Index for March, a weighted composite index of 85 different economic metrics, which fell to –0.45 in April from +0.05 in March, after the March index was revised up from the -0.15 reported last month…after accounting for that revision, the 3 month average of that index fell to –0.32 in April, down from –0.24 in March, which indicates that national economic activity has been below the historical trend over recent months…

Another regional Fed manufacturing survey for May was also released this week: the Kansas City Fed manufacturing survey for May, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index slipped to +4 in May, from +5 in April and from +10 in March, indicating a somewhat sluggish growth among that region’s manufacturers…

April Durable Goods: New Orders Down 2.1%, Shipments Down 1.6%, Inventories Up 0.4%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for April (pdf) from the Census Bureau reported that the widely watched new orders for manufactured durable goods fell by $5.4 billion or 2.1 percent to $248.4 billion in April, the second decrease in three months, after durable goods orders for March were revised to show a 1.7% increase to $253.8 billion, revised from the 2.7% increase to $258.5 billion that was reported a month ago…note that other than the usual monthly revisions to the underlying data, this month’s report also reflects the May 16th re-calibration of seasonal adjustment factors over the period from January 2002 through March 2019…

As is usually the case, the volatile monthly change in April’s new orders for transportation equipment caused this month’s headline change, as April transportation equipment orders fell $5.4 billion or 5.9 percent to $85.4 billion, on a 25.1% decrease to $9,182 million in new orders for commercial aircraft and a 3.4% decrease to $60,020 million in new orders for motor vehicles….excluding new orders for transportation equipment, other new orders were virtually unchanged in April, while new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment, were down 0.9% to $68,766 million…

The seasonally adjusted value of April’s shipments of durable goods, which will ultimately be inputs into various components of 2nd quarter GDP after adjusting for changes in prices, fell for the third time in four months, decreasing by $4.0 billion or 1.6 percent to $253.3 billion, after March shipments were revised from a increase of 0.3% to $259.6 billion to a decrease of 0.5% to $257.3 billion…again, shipments of transportation equipment were responsible for the April change, as they fell $3.7 billion or 4.1 percent to $85.8 billion, as the value of shipments of commercial aircraft fell 16.0% to $10,991 million…excluding that volatile sector, the value of other shipments of durable goods still fell 0.2%, but are still 4.1% higher year to date than a year ago….meanwhile, shipments of nondefense capital goods excluding aircraft, important in figuring equipment investment, were virtually unchanged in April after falling a revised 0.6% in March…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 9th time in 10 months, increasing by $1.8 billion or 0.4 percent to $422.6 billion, after the value of end of March inventories was revised from $420.5 billion to $420.75 billion, still a 0.3% increase from February…a $1.5 billion or 1.1 percent increase to $136.1 billion in the value of inventories of transportation equipment accounted for most of the April inventory increase..

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, fell for the second time in three months, decreasing by $0.7 billion or 0.1 percent to $1,179.1 billion, following a March figure which was revised from the 0.3% increase to $1,181.9 billion reported last month to a 0.1% increase to $1,179.8 billion…a $0.4 billion or 0.1% decrease to $810.6 billion in unfilled orders for transportation equipment was a major factor in the aggregate increase, but unfilled orders excluding transportation equipment also fell 0.1% to $368,492 million….compared to a year ago, the unfilled order book for durable goods is still 2.1% higher than the level of last April, with unfilled orders for transportation equipment 1.8% above their year ago level, on a 1.7% increase in the backlog of orders for motor vehicles and a 19.7% increase in the backlog of orders for defense aircraft…

New Home Sales Fell in April After Prior Months’ Sales were Revised Much Higher

The Census report on New Residential Sales for March (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 673,000 homes annually during the month, which was 6.9 percent (±14.0 percent)* below the revised March annual rate of 723,000 new home sales, but still 7.0 percent (±12.4 percent)* above the estimated annual rate that new homes were selling at in April of last year….the asterisks indicate that based on their small sampling, Census could not tell whether April new home sales rose or fell from those in March or from those in April a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report; sales of new single family homes in March were revised from the annual rate of 662,000 reported last month to a twelve year high annual rate of 723,000, while sales in February, initially reported at an annual rate of 667,000 and revised to a 662,000 rate last month, were revised back up to an annual rate of 669,000, and while new home sales in January, initially reported at an annual rate of 607,000 and revised from a 636,000 rate to a 625,000 rate last month, were revised to a 644,000 a year rate with this release…

The annual rates of sales reported here are seasonally adjusted and extrapolated from the estimates of canvassing Census field reps, which indicated that approximately 66,000 new single family homes sold in April, down from the estimated 72,000 new homes that sold in March but up from the 57,000 new homes that sold in February and from the 49,000 that sold in January….the raw numbers from Census field agents further estimated that the median sales price of new houses sold in April was $342,200, up from the median sales price of $305,800 in March and up from the median sales price of $314,400 in April a year ago, while the average new home sales price was at $393,700, up from the $372,300 average sales price in March, and up from the average sales price of $385,100 in April a year ago….a seasonally adjusted estimate of 332,000 new single family houses remained for sale at the end of April, which represents a 5.9 month supply at the April sales rate, up from the revised 5.6 months of new home supply now being reported for March…

For graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales decreased to 673,000 Annual Rate in April, March Revised up to New Cycle High and A few Comments on April New Home Sales

Existing Home Sales Slip Again in April, Down 4.4% Year over Year

The National Association of Realtors (NAR) reported that seasonally adjusted existing home sales slipped by 0.4% from March to April, projecting that 5.19 million existing homes would sell over an entire year if the April home sales pace were extrapolated over that year, a pace that was also 4.4% below the annual sales rate projected in April of a year ago….the NAR also reported that the median sales price for all existing-home types was $267,300 in April, 3.6% higher than in April a year earlier, which they report as “the 86th straight month of year-over-year gains“…..the NAR press release, which is titled “Existing-Home Sales Inch Back 0.4% in April“, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily read about them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf) to see what actually happened during the month…this unadjusted data indicates that roughly 455,000 homes sold in April, up 13.8% from the 400,000 homes that sold in March, but down by 1.1% from the 460,000 homes that sold in April of last year, so we can see that it was the seasonal adjustment that resulted in the reported sales decrease, as we’d normally expect home sales to increase as spring progresses…that same pdf indicates that the median home selling price for all housing types rose by 2.9%, from a revised $259,700 in March to $267,300 in April, while the average home sales price rose 2.6% to $305,200, from the $297,300 average sales price in March, while it was up 2.5% from the $297,800 average April home sales price of a year ago…for both seasonally adjusted and unadjusted graphs and additional commentary on this report, again see the following two posts from Bill McBride at Calculated Risk:NAR: Existing-Home Sales Decreased to 5.19 million in April and Comments on April Existing Home Sales

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most picked from the aforementioned GGO posts, contact me…)       

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