April's durable goods, new and existing home sales

Widely watched economic 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 the Chicago Fed National Activity Index (CFNAI) for April, a weighted composite index of 85 different economic metrics, which fell to –0.23 in April from –0.04 in March, in an index where any negative reading indicates economic activity has been below the historical trend …despite the April decrease, the widely watched 3 month average of the CFNAI rose to +0.01 in April from –0.17 in March, which thus indicates that national economic activity has averaged slightly above the historical average over those most recent months…

In addition to that national index, the index from 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 rose to -​2 in May, up from -8 in April and from -7 in March, indicating that just a small plurality of the region’s manufacturing firms still reported a decrease in their activity this month…

April Durable Goods: New Orders Up 0.7%, Shipments Up 1.2%, Inventories Up 0.1%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for April (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $1.9 billion or 0.7 percent to $284.1 billion in April, the third consecutive increase, after durable goods orders for March were revised to show an 0.8% increase to $282.2 billion, revised from the 2.6% increase to $283.4 billion that was reported a month ago…note that over and above the usual monthly revisions to the underlying data, this month’s report also reflects the May 14th re-benchmarking of shipments and inventories data in this survey for revised seasonal adjustment factors back to January 2012, and then the adjustment of the orders data to be consistent with the re-benchmarked data…while this resulted in modest revisions over the span of the data, we will only ​site the revisions to March….

As is often the case, the volatile monthly change in the value of April’s new orders for transportation equipment led this month’s headline change, as April transportation equipment orders rose $1.1 billion or 1.2 percent to $96.2 billion, on a 1.5% increase to $64,510 million in new orders for motor vehicles and parts and a 2.5% increase to $4,251 million in new orders for defense aircraft….excluding new orders for transportation equipment, other new orders were still up 0.4% in April, while excluding new orders for defense equipment, new orders were virtually unchanged….meanwhile, new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment orders, were up 0.3% to $74,037 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, also rose for a third consecutive month, increasing by $3.4 billion or 1.2 percent to $285.7 billion, after March shipments were revised from a virtually unchanged decrease to $282.4 billion to an increase of 0.1% to $282.4 billion, after re-benchmarking ​changed prior months…higher value​d shipments of transportation equipment led the April increase, increasing $3.1 billion or 3.4 percent to $93.0 billion. on a 15.4% increase in value of shipments of commercial aircraft…excluding that, the value of other shipments of durable goods rose just 0.2%, but are still 2.1% higher year to date than a year ago….meanwhile, the value of shipments of nondefense capital goods excluding aircraft, important in figuring equipment investment, rose 0.4% to $74,418 million in April, after falling a revised 0.3% in March…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the fourth time in five months, increasing by $0.6 billion or 0.1 percent to $528.5 billion, after the value of end of March inventories was revised but remained at $527.9 billion, now shown as unchanged from February, after re-benchmarking….an $0.6 billion or 0.4 percent increase to $170.9 billion in the value of inventories of transportation equipment was responsible for the April inventory increase, while excluding inventories of transportation equipment, the value of other inventories w​as statistically unchanged..

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the forty-fifth consecutive month, increasing by $3.1 billion or 0.2 percent to $1,401.0 billion, following a March increase which was revised from the 0.4% increase to $1,397.2 billion reported last month to a 0.3% increase to $1,398.0 billion, also after re-benchmarking….a $3.2 billion or 0.4 percent increase to $906.7 billion in unfilled orders for transportation equipment was responsible for the April increase, as unfilled orders for commercial aircraft and parts rose 0.6% to $661,860 million…. compared to a year ago, the unfilled order book for durable goods is now 7.9% higher than the level of last April, with unfilled orders for transportation equipment 13.4% above their year ago level, on a 21.6% increase in the backlog of orders for commercial aircraft…without that backlog of orders for commercial aircraft, the order book for other durable goods is 1.9% lower than last year at this time…

New Home Sales Reported Lower in April on Lower Prices

The Census report on New Residential Sales for April (pdf) estimated that new single family homes were selling at a seasonally adjusted annual pace of 634,000 homes during the month, which was 4.7 percent (±12.0 percent)* below the revised March annual rate of 665,000 new home sales, and 7.7 percent (±13.2 percent)* below the estimated annual rate that new homes were selling at in April of last year… the figures in parenthesis represent 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; seasonally adjusted estimates of housing units sold, housing units for sale, and the months’ supply of new housing have been revised back to January 2019; and with that, sales of new single family homes in March were revised from the annual rate of 693,000 reported last month to an annual rate of 665,000, and sales in February, initially reported at an annual rate of 662,000 and revised to a 637,000 rate last month, were revised to an annual rate of 631,000, while new home sales in January, initially reported at an annual rate of 661,000 and revised from a 664,000 rate to a 671,000 rate last month, were revised back to a 664,000 a year rate with this release…

The annual rates of sales reported here are seasonally adjusted and extrapolated from the rough estimates of canvassing Census field reps, which indicated that approximately 55,000 new single family homes sold in April, down from the estimated 64,000 new homes that sold in March and down from the 57,000 new homes that sold in February….the raw numbers from Census field agents further estimated that the median sales price of new houses sold in April fell to $433,500, down from the median sales price of $439,500 in March but up from the median sales price of $417,200 in April a year ago, while the average new home sales price was at $505,700, down from the $527,400 average sales price in March, but up from the average sales price of $500,900 in April a year ago….a seasonally adjusted estimate of 480,000 new single family houses remained for sale at the end of April, which represents a 9.1 month supply at the April sales rate, up from the revised 8.5 months of new home supply now being reported for March…

For graphs and commentary on this report, see the following posts by Bill McBride at Calculated Risk: New Home Sales Decrease to 634,000 Annual Rate in April and the identically headlined New Home Sales Decrease to 634,000 Annual Rate in April, which links to his detailed Real Estate Newsletter post, also with the same headline..

Existing Home Sales Fell 1.9% in April on Higher Prices

The National Association of Realtors (NAR) reported that seasonally adjusted existing home sales fell by 1.9% from March to April, projecting that 4.14 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 1.9% below the annual sales rate projected during April of a year ago….March sales, now shown at a 4.22 million annual rate, were revised up from the the 4.19 million annual rate originally reported….the NAR also reported that the median sales price for all existing-home types was at $407,600 in April, 5.7% higher than in April a year earlier, which they cite as “the tenth consecutive month of year-over-year price gains and the highest price ever for the month of April…..the NAR press release, which is titled “Existing-Home Sales Retreated 1.9% 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​, or​ if you’re interested in a regional breakdown, you can easily find ​all that 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 360,000 homes sold in April, up 10.8% from the 325,000 homes that sold in March, and up by 6.8% from the 337,000 homes that sold in April of last year, so we can see the effect of the usual seasonal adjustment on reported sales, as home sales normally increase as spring progresses​, and have been lowered accordingly by the seasonal adjustment….also note that same pdf indicates that the median home selling price for all housing types rose by 3.7%, from a revised $392,900 in March to $407,600 in April, with home prices rising month over month and year over year in all regions of the country.…to view both seasonally adjusted and unadjusted graphs and additional commentary on this report, again see the following posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Decreased to 4.14 million SAAR in April and NAR: Existing-Home Sales Decreased to 4.14 million SAAR in April; Median House Prices Increased 5.7% Year-over-Year, which in turn links to his in-depth newsletter article on this report…

 

 

(the above is the synopsis that accompanied my regular sunday morning news 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 of which are picked from the aforementioned GGO posts, contact me…)