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

Widely watched reports released this past week included the advance report on durable goods for September and the September report on new home sales, both from the Census bureau, and the Existing Home Sales Report for September from the National Association of Realtors (NAR)….in addition, this week also saw the release of two more regional Fed manufacturing surveys for October: the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index rose to +8 in October from -9 in September, suggesting a return to modest growth in that region’s manufacturing, and the Kansas City Fed manufacturing survey for October, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, which reported its broadest composite index fell to -3 in October, down from -2 in September but up from -6 in August, all readings which are indicative of contraction among that region’s manufacturers…

September Durable Goods: New Orders Down 1.1%, Shipments Down 0.4%, Inventories Up 0.5%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for September (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods fell by $2.8 billion or 1.1 percent to $248.2 billion in September, after August’s new orders were revised from the $250.7 billion reported last month to $251.0 billion, now 0.3% greater than July’s orders, revised from last month’s reported 0.2% increase…however, year to date new orders are now 0.8% below those of 2018, down from the 0.4% year to date decrease we saw in this report last month….the volatile monthly change in new orders for transportation equipment led the September orders increase, as new transportation equipment orders fell $2.3 billion or 2.7 percent to $84.5 billion, on a 11.8% decrease to $7,987 million in new orders for commercial aircraft….however, excluding orders for transportation equipment, other new orders still fell 0.3%, and excluding just new orders for defense equipment, new orders decreased 1.2%….meanwhile, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, fell $345 million or 0.5% to $68,642 million…

The seasonally adjusted value of September shipments of durable goods, which will ultimately be included as inputs into various components of 3rd quarter GDP after adjusting for changes in prices, fell for the 3rd month in a row, decreasing by $1.0 billion or 0.4 percent to $252.5 billion, after August shipments were revised from from $254.2 billion to $253.5 billion, now down 0.1% from July….a $1.0 billion or 1.2 percent decrease to $84.6 billion in shipments of transportation equipment was responsible for the decrease, without which all other shipments rose by a statistically insignificant $11 million…meanwhile, shipments of nondefense capital goods less aircraft were down 0.7% at $68,928 million, their fourth monthly decrease in a row ..

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 14th time in 15 months, increasing by $2.1 billion or 0.5 percent to $430.3 billion, after August inventories were revised from $428.6 billion to $428.2 billion, now just 0.2% higher than the prior month…an increase in inventories of transportation equipment were also responsible for the September inventory increase, as they rose $2.1 billion or 1.4 percent to $145.3 billion…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, were down in September following two monthly increases, but they fell by less than $0.1 billion to $1,163.5 billion, after August unfilled orders were revised from $1,176.5 billion to $1,176.66 billion, still a 0.9% increase from July…a decrease of less than $0.1 billion to $794.5 billion in unfilled orders for transportation equipment was responsible for most of the decrease, as unfilled orders excluding transportation equipment orders rose by a statistically insignificant $70 million…. compared to a year earlier, the unfilled order book for durable goods is now 1.8% below the level of last September, with unfilled orders for transportation equipment 2.7% below their year ago level, on a 4.0% decrease in the backlog of orders for defense aircraft and a 3.3% decrease in the backlog of orders for motor vehicles…  

September New Home Sales Little Changed; Median Sales Price at a 31 Month Low

The Census report on New Residential Sales for September (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 701,000 annually, which was 0.7 percent (±16.1 percent)* below the revised annual pace of 706,000 that new single family homes were selling at in August but 15.5 percent (±20.2 percent)* above the estimated annual rate that new homes were selling at in September of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether September new home sales rose or fell from those of August, or even from those of 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….hence, the estimates provided in these initial new home sales reports are not very reliable and often see significant revisions…with this report; sales of new single family homes in August were revised from the annual rate of 713,000 reported last month down to a 706,000 a year rate, while home sales in July, initially reported at an annual rate of 635,000 and revised to a 666,000 a year rate last month, were revised to a 665,000 a year rate with this report, while June’s annualized home sale rate, initially reported at an annual rate of 646,000 and revised from the first revision at a 728,000 a year rate to a 729,000 a year rate last month, were revised but still at a 729,000 a year rate with this release…

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 54,000 new single family homes sold in September, down from the estimated 57,000 new homes that sold in August and the estimated 56,000 that sold in July….the raw numbers from Census field agents further estimated that the median sales price of new houses sold in September was $299,400, down from the median sale price of $325,200 in August, down 8.8% from the median sales price of $328,300 in September a year ago and the lowest since February 2017, while the average September new home sales price was $362,700, down from the $394,800 average sales price in August, and down from the average sales price of $386,400 in September a year ago….a seasonally adjusted estimate of 321,000 new single family houses remained for sale at the end of September, which represents a 5.5 month supply of homes at the September sales rate, down from the 5.7 months supply of new homes originally reported for August…for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales decreased to 701,000 Annual Rate in September and A few Comments on September New Home Sales

September Existing Home Sales Down 2.2%

The National Association of Realtors (NAR) reported that their seasonally adjusted tally of existing home sales fell by 2.2% from August to September, the first decrease in three months, projecting that 5.38 million homes would sell over an entire year if the September home sales pace were extrapolated over that year, a pace that was still 3.9% above the annual sales rate projected in September of a year ago…August sales, now at a 5.50 million annual rate, were revised from the 5.49 million rate reported a month ago …the NAR also reported that the median sales price for all existing-home types was $272,100 in September, down from $278,900 in August but 5.9% higher than in September a year earlier, which they say “marks 91 straight months of year-over-year gains“…the NAR press release, which is titled “Existing-Home Sales Decrease 2.2% in September“, 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 find 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 like to look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…this unadjusted data indicates that roughly 452,000 homes sold in September, down by 15.0% from the 532,000 homes that sold in August, but 7.4% more than the 421,000 homes that sold in September of last year, so we can see that the seasonal adjustment gave a considerable boost to the monthly change published in the press release…that same pdf indicates that the median home selling price for all housing types fell 2.4%, from a revised $278,900 in August to $272,100 in September, while the average home sales price was $308,500, down 2.1% from the $315,000 average sales price in August, but up 4.2% from the $296,000 average home sales price of September a year ago, with regional average home sales prices ranging from a low of $240,700 in the Midwest to a high of $418,600 in the West… for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Decreased to 5.38 million in September and Comments on September 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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