Written by rjs, MarketWatch 666
August’s durable goods, new and existing home sales
Widely watched monthly reports that were released this past week included the August advance report on durable goods and the August report on new home sales, both from the Census bureau, and the Existing Home Sales Report for August from the National Association of Realtors (NAR).
Please share this article – Go to very top of page, right hand side, for social media buttons.
This week also saw the release of the Chicago Fed National Activity Index (CFNAI) for August, a weighted composite index of 85 different economic metrics, which fell to +0.79 in August from +2.54 in July, after the July index was revised from +1.18 to +2.54; that left the 3 month moving average of the index at +3.05 in August, down from a revised +4.23 in July, which supposedly still indicates that national economic activity has been way above the historical trend over the summer months…
This week also saw the release of two more regional Fed manufacturing surveys for September: 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 +18 in August to +21 in September, indicative of moderately strong growth of that region’s manufacturing, while the Kansas City Fed manufacturing survey, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index slipped to +11 in September, down slightly from +14 in August but up from +3 in July, still suggesting modest growth of that region’s manufacturing.
See also:
August Durable Goods: New Orders Up 0.4%, Shipments Down 0.3%, Inventories Down 0.1%
The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for August (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods grew by $1.0 billion or 0.4 percent to $232.8 billion in August, after rising by a revised 11.7% in July….July’s new orders were revised from the $230.7 billion reported last month to $231.8 billion, with the month over month percentage increase thus revised from 11.2% to 11.7%…however, even after four consecutive increases, year to date new orders are still 11.3% below those of 2019, an increase from the -12.1% year over year change we saw in this report last month….
The volatile new orders for transportation equipment rose $0.3 billion or 0.5% to $74,769, which was reduced by the cancellation of $2,784 million in orders for commercial aircraft…excluding new orders for transportation equipment, other new orders were also up 0.4% in August, led by a 1.5% or $0.5 billion increase $31.2 billion in new orders for machinery, which in turn led new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment intentions, to rise 1.8% to $67,703 million…
Meanwhile, the seasonally adjusted value of August’s shipments of durable goods, which will be inputs into various components of 3rd quarter GDP after adjusting for changes in prices, decreased by $0.7 billion or 0.3 percent to $244.1 billion, after the value of July’s shipments was revised from $244.0 billion to $244.8 million, thus revising the previously reported July shipments increase of 7.3% to one of 7.6% from June….a decrease in shipments of transportation equipment was responsible for the August decrease, as such shipments fell $1.4 billion or 1.7 percent to $81.6 billion, while shipments excluding transportation equipment rose 0.5% to $162.5 billion…meanwhile, shipments of nondefense capital goods excluding aircraft rose 1.5% to $67,165, after rising 2.8% in July, and are thus on track to make a significant contribution to 3rd quarter GDP…
At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, fell for the third consecutive month, decreasing by $0.5 billion or 0.1 percent to $420.5 billion, with July’s inventories revised from $422.6 billion to $421.0 billion at the same time, now an 0.8% decrease from June…a decrease in inventories of machinery led the August inventory decrease, as they fell $0.4 billion or 0.6 percent to $69.1 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, fell for the 5th time in 6 months, decreasing by $6.3 billion or 0.6 percent to $1,078.4 billion, after July’s unfilled orders fell 0.7% to $1,084.8 billion from June, revised from the 0.8% decrease to $1,084.4 billion reported last month…a $6.9 billion or 0.9 percent decrease to $728.0 billion in unfilled orders for transportation equipment was responsible for the August decrease, while unfilled orders other than those for transportation equipment rose 0.2% to $350.4 billion…. compared to a year earlier, the unfilled order book for durable goods is now 6.2% below the level of last August, with unfilled orders for transportation equipment 8.9% below their year ago level, largely on a 15.3% decrease in the backlog of orders for commercial aircraft.
See also:
August New Home Sales Reported at a 14 Year High After Prior Months Sales Were Revised Much Higher
The Census report on New Residential Sales for August (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 1,011,000 new homes a year, which was the highest since September 2006, 4.8 percent (±10.5 percent)* above the revised July rate of 965,000 new single family home sales a year, and 43.2 percent (±19.5 percent) above the estimated annual rate that new homes were selling at in August of last year….the asterisk indicates that based on their small sampling, Census could not be certain whether August new home sales rose or fell from those of July, 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, these initial new home sales reports are not very reliable and often see significant revisions…with this report, sales new single family homes in July were revised from the annual rate of 901,000 reported last month up to a 965,000 a year rate, while home sales in June, initially reported at an annual rate of 776,000 and revised to a 791,000 a year rate last month, were revised up to a 841,000 a year rate with this report, and while May’s annualized home sale rate, initially reported at a 676,000 rate and revised from a 682,000 a year to a 687,000 rate last month, were revised up to a 698,000 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 83,000 new single family homes sold in August, same as the estimated 83,000 new homes that sold in July and up from the 79,000 that sold in June….the raw figures from Census field agents further allowed for estimates that the median sales price of new houses sold in August was $312,800, down from the median sales price of $327,800 in July and down from the median sales price of $327,000 in August a year ago, and that the average August new home sales price was at $369,000, down from the $371,900 average sales price in July, and down from the average sales price of $392,700 in August a year ago….a seasonally adjusted estimate of 282,000 new single family houses remained for sale at the end of August, which represents a 3.3 month supply at the August sales rate, down from the revised 3.6 month supply of unsold homes in July, which was originally reported as a 4.0 month supply….for more details and graphics on this report, see Bill McBride’s two posts, New Home Sales increased to 1,011,000 Annual Rate in August and A few Comments on August New Home Sales.
See also:
August Existing Home Sales Rose 2.4% to a 13 Year High
The National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales rose 2.4% from July to August, projecting that 6.00 million homes would sell over an entire year if the August home sales pace were extrapolated over that year, a pace that was also 10.5% above the 5.43 annual sales rate they projected in August of a year ago….July’s sales, at a 5.86 million annual rate, were revised but unchanged from last month’s report…the NAR also reported that the median sales price for all existing-home types was $310,600 in August, 11.4% higher than in August a year earlier, which they report “marks 102 straight months of year-over-year gains“…..the NAR press release, which is titled “Existing-Home Sales Hit Highest Level Since December 2006“, 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 561,000 homes sold in August, down by 6.0% from the 597,000 homes that sold in July, but up by 5.5% from the 532,000 homes that sold in August of last year, so we can see that it was the seasonal adjustment that caused the annualized published figure for August to show a monthly increase and a record high…that same pdf indicates that the median home selling price for all housing types rose by 1.7%, from a revised $305,500 in July to $310,600 in August, while the national average home sales price was $342,500, up 1.3% from the $338,000 average in July, and up 8.8% from the $314.900 average home sales price of August a year ago, with the regional average home sales prices ranging from a low of $274,500 in the Midwest to a high of $450,700 in the West….for both seasonally adjusted and unadjusted graphs and additional commentary on this report, check out the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Increased to 6.00 million in August and Comments on August Existing Home Sales.
See also:
.