March durable goods, new and existing home sales

Widely watched releases of the past week included the March advance report on durable goods and the March report on new home sales, both from the Census bureau, and the Existing Home Sales Report for March from the National Association of Realtors (NAR)….also released this week was the Chicago Fed National Activity Index (CFNAI) for March, a weighted composite index of 85 different economic metrics, which fell to –4.19 in March from +0.06 in February, after February’s index was revised down from the +0.16 reported last month…as a result, the 3 month average of that index fell to –1.47 in March from a revised –0.20 in February, wherein negative readings indicate that national economic activity has been below the historical trend over recent months…

This week also saw the release of another regional Fed manufacturing survey for April: the Kansas City Fed manufacturing survey for April, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index fell to -30 in April, the lowest reading in the survey’s history, down from -17 in March and down from a index reading of +5 in February, indicating a severe contraction of that region’s manufacturing….

March Durable Goods: New Orders Down 14.4%, Shipments Down 4.4%, Inventories Up 0.6%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for March (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods decreased by $36.0 billion or 14.4 percent to $213.2 billion in March, after February’s new orders were revised from the $249.4 billion reported last month to $249.2 billion, now an increase of 1.1% from January’s new orders, revised from the 1.2% increase originally reported…but after that big March drop, year to date new orders are now down by 5.2% from those of 2019…the volatile monthly new orders for transportation equipment led this month’s decrease, as new transportation equipment orders fell $35.6 billion or 41.0 percent to $51.2 billion, on a 295.7% drop in new orders for commercial aircraft, due to net cancellations valued at $16,345 million….excluding orders for transportation equipment, other new orders were down 0.2%, while excluding just new orders for defense equipment, new orders fell 15.8%….at the same time, new orders for nondefense capital goods less aircraft, a category that’s a proxy for equipment investment, rose 0.1% to $68,903 million, led by a 3.7% increase in new orders for communications equipment…

Meanwhile, the seasonally adjusted value of March shipments of durable goods, which will ultimately be included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, decreased by $11.4 billion or 4.5 percent to $240.7 billion, after the value of February shipments was revised from $252.3 billion to $252.14 billion, still up 0.8% from January in the only shipments increase in 9 months….lower shipments of transportation equipment were responsible for most of the March decrease, as those shipments fell $10.9 billion or 12.8 percent to $74.1 billion on an 18.5% decrease in shipments of motor vehicles…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose by $2.7 billion or 0.6 percent to $437.4 billion, after the value of end of February inventories was revised from $434.9 billion to $434.7 billion, still an increase which is considered statistically unchanged from January….a $0.9 billion or 0.6 percent increase to $152.6 billion in the value of inventories of transportation equipment led the March increase, on a 1.5% increase in the value of inventories of commercial aircraft…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but somewhat volatile new orders, fell for the 1st time in the past 4 months, decreasing by $23.4 billion or 2.0 percent to $1,135.2 billion, after the February unfilled orders increase was revised from $1.4 billion to $1.3 billion, still up 0.1% from January…a $22.9 billion or 2.9 percent decrease to $768.3 billion in unfilled orders for transportation equipment accounted for most of the decrease, while unfilled orders excluding transportation equipment orders were down 0.1% to $366,848 million….the unfilled order book for durable goods is now 3.6% below the level of last March, with unfilled orders for transportation equipment now 5.0% below their year ago level, mostly on a 9.1% decrease in the backlog of orders for commercial aircraft…

New Home Sales Reported 15.4% Lower in March after Prior Months Revised Lower

The Census report on New Residential Sales for March (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 627,000 homes annually during the month, which was 15.4 percent (±14.8 percent) below the revised February annual sales rate of 741,000, and 9.5 percent (±14.6 percent)* below the estimated annual rate that new homes were selling at in March of last year….the asterisk indicates that based on their small sampling, Census could not tell whether March new home sales rose or fell from home sales 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….with this report, sales of new single family homes in February were revised from the annual rate of 765,000 reported last month to an annual rate of 741,000, and new home sales in January, initially reported at an annual rate of 764,000 and revised to a 800,000 annual rate last month, were revised back to a 777,000 a year rate with this report, while December’s annualized new home sales rate, initially reported at an annual rate of 694,000 and revised from the initial revision of 708,000 to a 724,000 a year rate last month, were revised to a 723,000 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 61,000 new single family homes sold in March, down from the estimated 66,000 new homes that sold in February but up from the 59,000 that sold in January…the raw numbers from Census field agents were further used to estimate that the median sales price of new houses sold in March was $321,400, down from the median sale price of $330,100 in February but up from the median sales price of $310,600 in March a year ago, while the average new home sales price was $375,300, down from the $387,200 average sales price in February, but up from the average sales price of $372,700 in March a year ago….a seasonally adjusted estimate of 333,000 new single family houses remained for sale at the end of March, which represents a 6.4 month supply at the March sales rate, up from the 5.0 months of new home supply originally reported in February…for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales Decrease to 627,000 Annual Rate in March and A few Comments on March New Home Sales..

Existing Home Sales Decrease 8.5% in March

The National Association of Realtors (NAR) reported that existing home sales fell at a 8.5% rate from February to March on a seasonally adjusted basis, projecting that 5.27 million existing homes would sell over an entire year if the March home sales pace were extrapolated over that year, a pace that was still 0.8% above the annual sales rate projected in March of a year ago…February homes sales, now reported at a 5.76 million annual rate, were revised from the 5.77 annual rate reported a month ago….the NAR also reported that the median sales price for all existing-home types was $280,600 in March, which was 8.0% higher than the median price of $259,700 in March a year earlier, which they report “marks 97 straight months of year-over-year gains“…..the NAR press release, which is titled “Home Sales Increase Year-Over-Year Despite Expected Monthly March Sales Decline Due to Impact of COVID-19“, is in easy to read plain English, so if you’re interested in a regional breakdown, or 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 usually look at the raw data overview (pdf) to see what actually happened during the month…this unadjusted data estimates that roughly 415,000 homes sold in March, up 23.9% from the 335,000 homes that sold in February, and up by 3.8% from the 400,000 homes that sold in March of last year, so we can see that it was the effect of a large springtime seasonal adjustment that caused the headline to show a decrease….that same pdf indicates that the median home selling price for all housing types rose by 3.8%, from a revised $270,400 in February to $280,600 in March, while the average home sales price rose 3.3% to $316,000 from the $305,800 average sales price in February, and was up 6.2% from the $297,500 average home sales price of March 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 5.27 million in March and Comments on March 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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