Mixed Bag on Housing Figures

August 28, 2007--Housing starts fell 6.1% to 1.38 million units in July and are down 20.9% year-over-year. Concurrently, new home sales increased 2.8% to 870,000 units. Industrial production increased 0.3% in July while the Index of Leading Indicators rose 0.4%. Last, new orders for durable goods jumped a much larger-than-expected 5.9%.

 

New Residential Construction
Housing starts fell 6.1% to 1.381 million units in July following a 2.1% increase in June. Furthermore, housing starts are down 20.9% on a year-ago basis. Housing permits decreased 2.8% to 1.373 million units in July and are down 22.6% compared to a year ago. The housing market remains in poor shape and will serve as a drag on growth throughout the rest of the year. Housing starts will likely be weak going forward.

 

New Home Sales
New home sales rose 2.8% in July to 870,000 units (seasonally adjusted annual rate). Despite the increase, sales on a year-ago basis are down 10.2%. The median sale price of a new home was $239,500 in July, up from $230,600 the previous month. Lastly, inventories decreased 2.7% to 7.5 months of supply but compared to a year ago are up 1.4%. This report was positive but on the whole the housing continues to struggle.

 

Industrial Production
Industrial production increased 0.3% in July following an upwardly revised 0.6% climb in June. Both manufacturing and mining output was strong, rising 0.6% and 0.7%, respectively. Utilities output, however, fell 2.1%. Lastly, capacity utilization increased from 81.8% to 81.9% and continues to raise concerns about inflationary pressures.

 

Conference Board Leading Indicators
The Conference Board's Index of Leading Economic Indicators rose 0.4% in July following a 0.3% decline in June. Six of the ten components made positive contributions to the index, led by improved consumer expectations and longer delivery times in manufacturing. Over the past three months, the index has grown 1.5% at an annual rate while the 6-month annualized growth rate is 0.3%.

 

Durable Goods
New orders for durable goods surged 5.9% in July following an upwardly revised 1.9% increase in June. New orders for core capital goods, which signify business investment in equipment and software, rose 2.2%. Shipments and unfilled orders both increased for the month, rising 3.8% and 2.4%, respectively. Lastly, inventories inched up 0.1%.