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

Widely watched reports released the 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)….the week also saw the release of the Regional and State Employment and Unemployment Report for September from the Bureau of Labor Statistics, a report which breaks down the two employment surveys from the monthly national jobs report by state and region …while the text of that report provides a useful summary of the state and regional data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands..

In addition, the week also saw two more regional Fed manufacturing surveys for October: the Kansas City Fed manufacturing survey, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index rose to -4 in October, up from -8 in September, but down from -3 in August, indicating that a small plurality of that region’s manufacturers continued to report deteriorating conditions this month; and 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 from –21 in September to -14 in October, indicating that a smaller majority of that region’s manufacturers reported slower manufacturing activity this month..

September Durable Goods: New Orders Fell 0.8%, Shipments Fell 0.6%, Inventories Fell 0.2%

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 $2.2 billion or 0.8 percent to $284.8 billion in September, the third decrease in four months, after August’s new orders were revised from the $289.6 billion reported last month to $287.0 billion, now an 0.8% decrease from July’s orders, rather than the insignificant increase that was previously reported …year to date new orders are now running 1.5% below those of 2023, down from the 1.3% year to date decrease we saw in this report last month…

The volatile monthly change in new orders for transportation equipment was responsible for the September new orders decrease, as the value of new transportation equipment orders fell $3.1 billion or 3.1 percent to $95.4 billion, on a 27.2% decrease to $14,668 million in the value of new orders for commercial aircraft….excluding orders for transportation equipment, other new orders rose 0.4%, but excluding the 6.4% increase in new orders for defense equipment, new orders decreased 1.1%…meanwhile, new orders for nondefense capital goods less aircraft, a proxy for equipment investment intentions, rose $382 million or 0.5% to $74,054 million, after rising by an upwardly revised 0.3% in August…

The seasonally adjusted value of September shipments of durable goods, which will be included as inputs into various components of 3rd quarter GDP after adjusting for changes in prices, fell for a second straight month, decreasing by $1.8 billion or 0.6 percent to $287.3 billion, after the value of August shipments was revised from from $289.4 billion to $289.1 billion, now down 0.6% from July…a decrease in the value of shipments of transportation equipment was the reason for the September decrease, as they fell $2.3 billion or 2.4 percent to $94.4 billion on a 15.1% decrease in the value of shipments of commercial aircraft, while the value of shipments excluding transportation equipment rose 0.3% to $192,911 million….at the same time, shipments of nondefense capital goods less aircraft were down 0.3% at $73,391 million, after falling 0.1% in August…

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, fell for the third time in four months, decreasing by $1.0 billion or 0.2 percent to $528.3 billion, after the value of August inventories was revised from $529.8 billion to $529.238 billion, now considered a virtually unchanged decrease from July…a decrease in the value of inventories of transportation equipment led the September inventory decrease, falling $1.0 billion or 0.6 percent to $171.1 billion, on a 0.6% decrease in the value of inventories of commercial aircraft, while the value of inventories of other than transportation equipment was virtually 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 in September for the forty-ninth time in fifty months, increasing $2.3 billion or 0.2 percent to $1,391.2 billion, after August’s unfilled orders were revised from $1,391.4 billion to $1,389.0 billion, now a 0.2% increase from July, rather than the 0.4% increase previously reported….an increase of $1.0 billion or 0.1 percent to $895.1 billion in unfilled orders for transportation equipment was responsible for less than half of the increase, while unfilled orders excluding transportation equipment orders rose by $1,212 million or by 0.2% to $496,131 million at the same time….compared to a year earlier, the unfilled order book for durable goods is still 3.1% above the level of last September, as unfilled orders for transportation equipment are 5.0% above their year ago level, largely due to a 7.7% increase in the backlog of orders for commercial aircraft…

New Home Sales Reported Higher After Prior Months Sales Revised Lower

The Census report on New Residential Sales for September (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 738,000 annually, which was 4.1 percent (±14.7 percent)* above the revised annual pace of 709,000 that new single family homes were selling at in August, and 6.3 percent (±18.6 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 the 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….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 716,000 reported last month down to a 709,000 a year rate, and home sales in July, initially reported at an annual rate of 739,000 and revised to a 751,000 a year rate last month, were revised down to a 726,000 a year rate with this report, while June’s annualized home sale rate, initially reported at an annual rate of 621,000 and revised from a revised 668,000 rate to a 681,000 a year rate with the August report, were revised to a 672,000 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 58,000 new single family homes sold in September, up from the estimated 56,000 new homes that sold in August, but down from the estimated 62,000 that sold in July….the raw figures from Census field agents further estimated that the median sales price of new houses sold in September was at $426,300, up from the median sale price of $410,900 in August, but statistically unchanged from the median sales price of $426,100 in September a year ago, while the average September new home sales price was at $501,000, up from the $486,500 average sales price in August, but down from the average sales price of $515,000 in September a year ago….a seasonally adjusted estimate of 470,000 new single family houses remained for sale at the end of September, which represents a 7.6 month supply of homes at the September sales rate, down from the revised 7.9 months supply of new homes now indicated for August…for historical graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales Increase to 738,000 Annual Rate in September and New Home Sales Increase to 738,000 Annual Rate in September; Median New Home Price is Down 7% from the Peak due to Change in Mix…

Existing Home Sales Fell 1.0% in September to a 14 year Low

The National Association of Realtors (NAR) reported that their seasonally adjusted tally of existing home sales fell by 1.0% from August to September, the 7th decrease in 8 months, projecting that 3.84 million homes would sell over an entire year if the September home sales pace were extrapolated over that year, a pace that was also 3.8% below the annual sales rate projected in September of a year ago…August sales, now shown at a 3.88 million annual rate, were revised from the 3.86 million rate reported a month ago …the NAR also reported that the median sales price for all existing-home types was $404,500 in September, 3.0% higher than in September a year earlier, which they say is “the 15th consecutive month of year-over-year price increases“…they do not mention that it was the 37th consecutive month of year-over-year sales decreases, and that​ home sales were the lowest since October 2010....the NAR press release, which is titled “Existing-Home Sales Slid 1.0% 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, et al., 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 for 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 331,000 homes sold in September, down 12.7% from the 379,000 homes that sold in August, and 4.9% fewer homes than the 348,000 homes that sold in September of last year, so we can see that the seasonal adjustment gave a considerable boost to the headline monthly change published in the Realtor’s press release….that same pdf indicates that the median home selling price for all housing types fell for a fourth consecutive month, from a revised $414,200 in August to $404,500 in September, while the average home sales price, which had first topped $500,000 during 2022, is no longer published…regional median home sales prices range from a low of $306,600 in the Midwest, to a high of $616,400 in the West, with prices in the Northeast falling 7.2% in the current report, down​ from $503,200 in August to $467,100 in September… 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 3.84 million SAAR in September, New Cycle Low and NAR: Existing-Home Sales Decreased to 3.84 million SAAR in September, New Cycle Low; Median House Prices Increased 3.0% Year-over-Year..

 

 

(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…)