Existing home sales down – new home sales slightly up
Written on March 20, 2011 by Wiley Hayden
Existing home sales rose by 2.7% mom to a higher than expected 5.36m in January. However, the indications for February are unfavourable: new home sales fell sharply in January, and forerunning pending home sales declined by about 6% in the last two months. We thus predict that existing home sales will have dropped by about 5% mom to 5.10m in February. Due to having declined by almost 13% mom in January, new home sales were close to their all-time low. Thus we forecast that they will have recovered slightly to about 300k in February – still lower than the 2010 average of 320.5k.
Durable goods orders jumped by 3.2% mom in January, particularly due to a surge in aircraft orders which were 50 times higher mom. But non-defense capital goods orders ex aircraft fell almost 7% mom, causing a decline in durable goods orders ex transportation of 3.0% mom. As the graph shows, the very favourable development of the ISM new orders component in the previous months indicates that durable goods orders ex transportation will have risen noticeably in February. However, aircraft orders will have corrected downward, which is also indicated by Boeing data. We thus expect total durable goods orders to have increased by a mere 0.8% mom, while orders ex transportation might have risen by 2.5% mom.
Initial jobless claims dropped by 16k to 385k in the week ending 12 March, and the 4-week moving average was similarly low and thus reached the lowest level since July 2008. We expect initial jobless claims to have remained around the current level in the week ending 19 March.
The revised GDP data for Q4 showed a downward revision of the growth rate from 3.2% to 2.8% qoq annualised, mainly due to a bigger drop in spending of states and local governments and a smaller rise in consumer spending as initially estimated. We expect no major changes in the third release of the GDP figures for Q4.
The University of Michigan’s (UMI) preliminary March consumer sentiment declined sharply from 77.5 to 68.2, particularly due to a massive drop in expectations. The ongoing surge in gasoline prices might have played a decisive role. The geopolitical instability in North African and Arabic countries could have weighed on consumer’s mood too, as it increases the upside risks for oil prices. Moreover, the degree of uncertainty has picked up considerably after the nuclear disaster in Japan resulting from the earthquakes and the tsunami. Given that the weekly Bloomberg consumer comfort poll plummeted by almost nine points in the first two weeks of this month, we forecast that UMI’s final consumer sentiment will have fallen further to about 65.0 in March.
Similar Posts:
- Existing home sales down – new home sales slightly up
- Home sales (Jan): Weather-related decline
- ISM indices (Apr): At robust expansion levels
- FOMC meeting: No major changes in the statement
- GDP (Q3, 2nd estimate): Slight upward revision
