Durable Goods, New and Existing Home Sales

April 29, 2008--Durable goods orders inched down 0.3% in March, as businesses purchased core capital goods. The housing market remains bleak, as new home sales decreased 8.5% in March and existing homes sales fell 2.0%.

 

Durable Goods
Durable goods orders fell 0.3% in March after a 0.9% decrease in February. Shipments and new orders caused the decline, as they fell 0.4% and 0.3%, respectively. Concurrently, new orders for core capital goods, which signify business investment in equipment and software, remained steady. Inventories (1.1%) and unfilled orders (0.9%), however, both posted gains. March's numbers encouraged analysts as they generally predicted larger declines. For the first time in three months orders for core capital goods did not decrease, suggesting improved investment in light of the current credit crunch and weak economic outlook.

 

New Home Sales
New home sales decreased 8.5% in March to 526,000 units, following a drastically downward revision of 5.3% in February (originally reported as a decline of 1.8%). Furthermore, inventory surged to 11 months in March. The median price of a new single family home decreased to $227,912, after a slight increase in February. A quick recovery in the housing market is unlikely due to tightened lending standards and continuing uncertainty in financial and credit markets.

 

Existing Home Sales
According to the National Association of Realtors, existing home sales fell 2.0% in March. In a spot of encouraging news, the median existing house price rose 0.9% in March, though remains 8% lower than one year ago.  Sales of single-family homes fell, while the sales of condos posted their second consecutive increase. A weak housing market is expected this year, as continued concerns over credit quality and unstable financial markets will keep standards for mortgage underwriting high, thus keeping demand low.