Saturday, 24 December 2005

US new home sales fall but consumer sentiment and durable goods orders rise

There were more signs of a slowdown in the US housing market yesterday. From Reuters:

The Commerce Department said sales of U.S. single-family homes slumped 11.3 percent in November, the largest one-month decline since January 1994.

The annual selling rate of 1.245 million units was below forecasts for a 1.305 million unit rate, and was down from October's record 1.404 million unit rate. Sales declined in three of the four regions.

Inventories of unsold homes are bulging, with some 4.9 months of supply now on hand, the highest since December 1996.

As usual, Calculated Risk puts the numbers in perspective, adding that the median and average sales prices are "trending down", but overall, the "report is still reasonably strong".

Meanwhile, the same Reuters report also mentions that consumers remain relatively cheery.

The University of Michigan's final sentiment index for December rose to 91.5 from a preliminary of 88.7, and was up from 81.6 in November. Wall Street economists had forecast the index at 89.0.

The overall durable goods orders number for November was good too.

Earlier, the government reported that new orders for U.S.-made durable goods surged in November on a jump in civilian aircraft purchases. Non-transportation orders slid as defense outlays tumbled.

The 4.4 percent rise was the largest in overall durable goods orders since May, trouncing economists' forecasts for a rise of 1 percent in orders for expensive items built to last three years or more...

A closely watched proxy for business spending, non-defense capital goods orders excluding aircraft fell 2 percent.

The November dip in non-defence capital goods orders ex aircraft notwithstanding, the pace of durable goods orders has been strong over the past year. Year to date, new orders for durable goods have risen 7.5 percent over the corresponding period last year. Over this time frame, non-defence capital goods ex aircraft have done even better, rising 10.4 percent.

So it's been good, but can it last?

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