Economic data released Wednesday showed that new home sales were higher than they were a month ago, but remained nowhere near their 2005 peak; and durable goods orders also rose but not in a way that signals long-term growth.
Sales of new single-family houses in September rose 6.6% to a seasonally adjusted annual rate of 307,000, the U.S. Commerce Department reported. Analysts’ consensus was for sales of 300,000.
September’s figure compares to a revised August rate of 288,000, which is 21.5% below the estimate of 391,000 in September 2009. At that time, people were starting to take advantage of the federal tax credit of up to $8,000 for first-time homebuyers, which expired on April 30.
Home sales over the past five months are at their worst since the Commerce Department started keeping records in 1963. Just as striking, looking back to 2005, an annually adjusted 1.39 million new homes were sold in July of that year, at the height of the U.S. housing boom.
“While month to month the new home sales number looks good, when you look back at the historic averages, it’s poor,” said Steve Blitz, senior economist with New York-based ITG Research.
Blitz added that there are “signs of life in the economy,” with no signs of a double-dip recession, yet the nation’s 2% growth rate is lower than the growth normally seen in a post-recession economic cycle.
“We’re not getting the standard lift from the housing market that we would normally see,” he said. “We expect housing to stay flat like this for a while.”
The median sales price of new houses sold in September was $223,800, and the average sales price was $257,500, with a supply of 8.0 months at the current sales rate. The strongest sales came out of the Midwest, which saw a 61% monthly surge compared with an approximate 3% sales increase in the South and Northeast and a nearly 10% decrease in the West.
As for durable goods, the Commerce Department reported that sales in September were 3.3% higher than in August, increasing $6.3 billion to $199.2 billion, largely due to demand for commercial aircraft. Excluding transportation, however, new orders fell by 0.8% after a 1.9% rise in August.
Companies in two of the past three months have reduced their spending on durable goods, and this reduced business spending signals a rocky future for economic growth. Investment by companies in capital goods excluding aircraft dropped 0.6% in September after rising 4.8% in August.
“Core orders (nondefense non-aircraft capital goods orders) paint a more subdued picture, dipping by 0.6% for the month as communications equipment orders fell by 18.6,” wrote the economists at PNC Financial Services, Pittsburgh, in an analyst note. “Shipments of durable goods started the third quarter strong, increasing by 2.5% in July, but then slipped by 1.4% in August and by 0.4% in September, pointing to softer growth in equipment investment as a component of third-quarter GDP.”
Read about last month’s new home sales and durable goods reports at AdvisorOne.com.