New-home sales miss expectations
Sales of new U.S. homes were unexpectedly weak last month, although they climbed off an 11-year low, and orders for long-lasting goods fell, according to two reports Thursday that underscored the economy’s weakness.
A third report showed the number of Americans filing an initial claim for unemployment aid edged down last week but stayed at a level suggesting some softening in the job market.
The Commerce Department said new single-family home sales rose 4.8% in September to an annual rate of 770,000 units, from a downwardly revised 735,000 pace in August. Economists had expected a 780,000-home sales rate.
The August figure, the lowest since October 1996, was previously reported at 795,000. Sales for June and July also were revised lower, showing the market for new homes has been even weaker than had been thought.
“Before we get too giddy about a possible bottom in the market, we do urge our clients to note the sharply revised downward estimate for August,” Joseph Brusuelas, chief economist for IdeaGlobal in New York, said in a client note.
“We have a strong suspicion that we will see some major revisions to this data when it is released next month.”
Though the rate of new-home sales was below analysts’ expectations, some economists and investors took solace in the fact that underlying trends looked somewhat more promising.
“There is some good news in these numbers, with slightly lower inventories and a 2.5% rise in the median sales price of a new home,” said Michael Schenk, senior economist with Credit Union National Assn. and Affiliates in Washington. “But it’s clear that we’re not out of the woods -- far from it.”
Durable-goods orders fell 1.7% in September on the back of a sharp drop in transportation orders. Analysts polled by Reuters expected a 1.5% rise in total orders last month after a 5.3% decline in August, earlier estimated as a 4.9% decrease.
Even when volatile data for transportation and defense orders were stripped away, the total was weaker than expected.
“From a longer-term perspective, durable-goods orders are still running below year-ago levels, not least because of sharply reduced housing-related orders,” said Roger Kubarych of UniCredit in New York. “But in the short term, there is nothing in today’s report to justify fears of an imminent recession.”
Transportation equipment orders fell 6.3% on a 37.3% slide in defense aircraft and parts orders. Motor vehicle and parts orders were down 2.9%. After stripping out transportation, orders rose 0.3%, weaker than the 0.7% rise analysts were expecting.
In another report, Labor Department data showed the number of new claims for jobless aid fell by a much-less-than-expected 8,000 last week, which left claims at fairly high levels.
Initial claims for state unemployment insurance benefits totaled 331,000 in the week ended Oct. 20 after the prior week’s upwardly revised 339,000, which originally had been reported as 337,000. Economists surveyed by Reuters had forecast a much lower total of 320,000 claims for last week.
A Labor Department official noted that there might be some volatility in the data because of layoffs and rehiring in the automobile industry linked to recent industrial action.