New home sales hit a ten-year high, and consumer sentiment grew rosier, while orders for durable goods also posted gains.
New Home Sales
Sales of new homes hit their highest point in a decade with transactions of single-family homes in September skyrocketing to an annual rate of 667,000, which was up 18.9 percent from August’s rate of 561,000, the Census Bureau and the Department of Housing and Urban Development reported last week. Compared to last year, this was 17 percent higher than September 2016’s pace of 570,000.
Looking at price and supply, the average sales price for new houses sold during September was $385,200, and the median price was $319,700. The estimated inventory of new homes for sale at the end of September totaled 279,000, representing a five-month supply at September’s sales rate.
One thing to keep in mind is that in the wake of hurricanes Harvey and Irma, there is a good chance that the sales volume increased thanks to owners that needed to replace homes lost to the storms.
“This is yet another sign that, as we first saw with the initial jobless claims data, the recovery from Harvey was very fast and the disruption from Irma in Florida was far less than initially feared,” Amherst Pierpont Securities Chief Economist Stephen Stanley told the Associated Press.
Consumer sentiment kicked up in October, with the Index of Consumer Sentiment growing 5.9 percent from September’s 95.1 to hit 100.7 for the month, according to last week’s report from the University of Michigan Surveys of Consumers. Compared to last year, this was up 15.5 percent from October 2016’s 87.2.
The Current Economic Conditions Index, which gauges how consumers feel about the current economic situation, grew 4.3 percent from September’s 111.7 to hit 116.5 in October. The Index of Consumer Expectations, which describes how consumers feel the economy will fare over the next 12 months, grew 7.2 percent from September’s 84.4 to hit 90.5 in October.
As Surveys of Consumers Chief Economist Richard Curtin noted in last week’s report, data indicates a 2.6 percent growth rate in real consumption during 2017, so why such a rosy outlook for modest, measured gains?
“To be sure, consumers do not anticipate accelerating growth rates but rather a continuation of the slower pace of growth that has characterized this recovery,” Curtin noted in the report. “Low unemployment and low inflation rates have made lower income growth rates more acceptable. Moreover, the Great Recession has caused a fundamental change in assessments of economic risks, with consumers now giving greater preference to economic stability relative to economic growth.”
Durable Goods Orders
New orders for durable goods grew 2.2 percent, or $5.1 billion, to hit $238.7 billion, according to last week’s report from the Census Bureau. This was well above market expectations for only 0.7 percent growth, and continued August’s two percent gain. Durable goods orders have posted gains in three of the past four months.
Shipments of durable goods grew one percent, or $2.4 billion, to reach $240.5 billion. September’s gains continued August’s 0.7 percent growth, and was the fourth month shipments have grown in the past five months.
Orders for transportation equipment led the growth, growing 5.1 percent to hit $81.2 billion. Excluding transportation, durable goods orders only grew 0.7 percent. Likewise, shipments of transportation goods grew 1.4 percent to hit $79.7 billion.
This week, we can expect:
- Monday — Personal incomes and spending for September from the Bureau of Economic Analysis.
- Tuesday — Consumer confidence for October from The Conference Board.
- Wednesday — Construction spending for September from the Census Bureau; car and truck sales for October from the auto manufacturers.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration.
- Friday — Factory orders and the balance of trade for September from the Census Bureau; payrolls, unemployment rate, and hourly earnings for October from the Bureau of Labor of Statistics.