Durable Goods Orders, State Home Prices Rise
The U.S. economy picked up steam in June, according to economic reports released Friday, fueled by a jump in orders for big-ticket items such as cars and appliances.
Durable goods orders far surpassed most economists’ forecasts, while a separate report on sales of existing homes showed the housing market, though off slightly, still keeping pace with its recent strong levels.
Meanwhile, the California Assn. of Realtors reported that the median price of a single-family home in California rose 4.3% in June from the year before, the largest annual increase since December 1991. The increase is in line with previously reported data on Southern California prices released earlier this month by Acxiom/Dataquick, a real estate information service.
The rise of the median home price to $189,170, up from $181,370 in June 1996, was fueled by 9.9% and 7.9% gains, respectively, in Orange County and the San Francisco Bay Area, the association said in its monthly report. For the month, the statewide median home price rose 2.1%.
The association’s report is widely watched as a sign of the health of the California economy. Faster price appreciation in what had been a lagging home market provides more evidence that the state’s recovery from a deep recession is picking up momentum. The report also underscores the favorable environment for home sales fostered by renewed economic growth and low interest rates, which make mortgages more affordable.
The reports on durable goods and sales of existing homes fit economists’ expectations for a spell of steady, noninflationary growth following a surge in the first quarter and had little impact on Wall Street.
“These numbers . . . fit with a story of a moderating economy in the second and third quarters,” said economist Maureen Maitland of Donaldson, Lufkin & Jenrette in New York.
Orders for durable goods--items from trucks to computers designed to last three or more years--rose 2.3% to a record seasonally adjusted $180.6 billion in June, the Commerce Department said Friday.
It was the biggest gain since January, more than expected by economists, and followed a 0.4% decrease in May.
Meanwhile, sales of previously owned homes nationally fell 2.6% in June to a seasonally adjusted annual rate of 4.14 million units, the National Assn. of Realtors said. Sales had increased 4.7% in May.
Wall Street economists had projected a somewhat smaller decline, but a coinciding drop in home inventories suggested the housing market remains firm.
“Today’s report is just a minor blip,” said John Park, an economist at Sanwa Securities (USA) Co. “We should definitely start seeing the housing sector pick up steam in the third quarter.”
The median price of an existing home in the U.S. was $127,200 in June, up 3.5% from a year ago. The median is the midpoint, meaning half sold for more and half for less.
By region, home sales fell 7.7% in the Northeast and 6.4% in the West. They were unchanged in the South and rose 0.9% in the Midwest.
June’s durable-goods increase was concentrated in transportation equipment, up 7.5%; military goods, up 9.9%; and primary metals such as steel, up 0.4%. Bookings were unchanged for electrical equipment and down 0.6% for industrial machinery.
Shipments of durable goods, a measure of current production, climbed 1.8% in June, not quite as strongly as new orders. As a result, the backlog of unfilled orders rose 0.3%.
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Durable Goods
Seasonally adjusted new orders, on billions of dollars:
June, 1997: $180.6
* Source Commerce Department
