More Bad Economic News: New Home Sales Down, Durable Goods Orders Weak
Following up on yesterday’s report that existing home sales had fallen 27% in July, we learned today that sales of new homes also fell last month to the lowest rate since 1995:
WASHINGTON — New home sales fell 12.4 percent in July, the Commerce Department reported Wednesday, confirming that the U.S. housing market continues to falter.
The unexpectedly gloomy data follow a report Tuesday that showed sales of previously occupied homes fell to a 15-year low in July, adding to concerns that the economy could fall back into recession.
Home sales have been particularly weak since a home buyer tax credit expired at the end of April. High unemployment has kept people from buying homes because they are worried about their jobs. Banks have also been cautious in making new loans after taking huge losses in recent years from failed mortgages.
On top of these bad housing numbers, there’s a new durable goods report out that shows the economy slowing:
Orders for U.S. durable goods increased less than forecast in July, a sign that one of the few remaining bright spots in the economy is cooling.
Bookings increased 0.3 percent, compared with the 3 percent median estimate of 75 economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. Excluding transportation equipment, demand unexpectedly fell.
Manufacturing is slowing after leading the U.S. out of the worst recession since the 1930s as consumers cut back on spending. The pullback in factory activity will probably contribute to deceleration in growth in the second half of the year.
“Even manufacturing, the one sector consistently making jobs, is showing signs of fatigue,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report. “Businesses appear to be buying new equipment simply to replace old gear or boost efficiency rather than expand already- bloated capacity.”
Bookings excluding transportation equipment dropped 3.8 percent, the most since January 2009. The survey median projected a 0.5 percent gain.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, dropped 8 percent after climbing 3.6 percent in June, more than previously estimated. Over the past three months, these orders climbed at a 20 percent annual pace, down from a 31 percent gain in the three months to June, signaling companies will rein in investment.
The signs that we’re heading for a double dip recession, or may even already be in one, seem to be growing by the day.