Key information on economic health – and a reminder to look beyond the headlines.
Beyond the Headlines in Housing and Manufacturing1. Housing Drops
The headlines: Sales of both new and existing homes fell in July.
The deeper story: Relatively few existing houses are available for purchase. In addition, builders are focusing on more lavish new homes rather than the modest ones that many buyers seek. As a result, the median price of a new home hit its highest July level ever, climbing to $313,700 – 6% higher than this time last year. Existing home prices are also 6.2% above where they were in July 2016.
The takeaway: High prices may be excluding first-time homebuyers from the market – especially for new houses.
2. Manufacturing Declines
The headlines: Durable goods orders plunged by 6.8%.
The deeper story: The headline’s stated monthly decline is largely due to a sharp drop-off in orders for transportation equipment, in particular for civilian aircraft. However, if you dig deeper, you will see that July’s civilian aircraft decrease follows a massive 129.3% increase in June, calming any concerns about the aircraft industry. Overall, orders for core goods beat expectations and could help drive a higher reading for second quarter GDP.
The takeaway: Orders and shipments for many key goods increased in July, which points to positive sentiment among businesses – and good news for the economy.