New Home Sales Flat in April, Inventories are Shrinking Slowly
Sales of new single-family homes were virtually flat at an annual rate of 352,000 in April. Sales of new single-family homes are down 74.7% from the peak in July 2005, the 76.3% drop in January 2009 from the cycle high is probably the bottom for sales of new homes. Sales fell in the West (-3.8%), but held steady in the Midwest and Northeast and rose 1.9% in the South. The recent hike in mortgage rates is a big negative factor for home sales.
Inventories of unsold new single-family homes moved down to a 10.1-month supply from a cycle high of a 12.4-month supply in January 2009.
The median price of a new single-family home rose 3.7% in April to $209,700 but dipped 14.9% from a year ago. The elevated level of inventories is not favorable for prices.
Jobless Claims Fall but Continuing Claims Continue to Advance
Initial jobless claims fell 13,000 to 623,000 during the week ended May 23. Continuing claims, which lag initial claims by one week, rose 110,000 to 6.788 million and the insured unemployment rate hit the 5.1% mark. The number of folks collecting unemployment insurance is troubling but the downward trend of initial jobless claims is the big positive aspect of the report.
Durable Goods Orders were Weak in April, Defense Orders Lifted Total Bookings
Orders of durable goods increased 1.9% in April, after a 2.1% drop in the prior month. The 23.2% jump in orders of defense goods lifted the overall total. Bookings of non-defense capital goods declined 2.0% and that of non-defense capital goods excluding aircraft also dropped 1.5%. On a year-to-year basis, orders of durables fell 26.6% in April compared with a 24.7% drop in March.
Shipments of durable goods fell 0.2% in April, while shipments of non-defense capital goods excluding aircraft were down 2.1%. On a year-to-year basis, shipments of non-defense capital goods excluding aircraft were weaker in April (17.6%) compared with the 13.1% drop in March. The overall tone of the report does not match the moderation of new orders seen in the ISM factory sector survey.
