NEW$ & VIEW$ (27 MAY 2015): Durables; Housing

Durable Orders Slip, but Business Spending Firms Up Business investment is slowly picking up after one of its worst stretches since the recession, a sign the U.S. economy may be poised for a turnaround following a dismal start to the year.

Orders for durable goods—products such as power saws and hot tubs designed to last at least three years—declined a seasonally adjusted 0.5% in April from a month earlier, the Commerce Department said Tuesday. Compared with a year earlier, overall orders declined 1.3% in April.

But underlying figures offered some hope. Last month’s decline was driven largely by a drop-off in orders for aircraft. Excluding the volatile transportation sector, orders climbed 0.5%. And March durable-goods orders were revised up to 5.1%, from a previously reported 4.4% increase.

Orders for nondefense capital goods excluding aircraft—a proxy for company spending on equipment and software—increased 1% in April.

The March reading was revised up to 1.5% from a previously reported 0.1%. But that still wasn’t enough to offset February’s 5.1% drop. (Charts from Doug Short and CalculatedRisk)

U.S. New Home Sales Improve With Prices

New home sales during April recovered 6.8% to 517,000 units (26.1% y/y) from 484,000 in March, initially reported as 481,000. The latest figure beat expectations for 503,000 sales in the Action Economics Forecast Survey. Sales are quoted at seasonally adjusted annual rates.

Home prices recovered along with sales. The median price for a new home during April increased to $297,300 (8.3% y/y) from $285,500, revised from $277,400. The average price of a new home slipped to $341,500 (5.0% y/y) from $343,300. It was the lowest average price since September.

Home Prices Continue to Climb Home prices continued their unremitting climb in March, underscoring concerns of some economists over whether the strong price gains are sustainable.

The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.1% in the 12 months ended in March, slightly weaker than a 4.2% increase in February.

The 10-city and 20-city indexes saw similar year-over-year increases in March than in February. The 10-city index gained 4.7% from a year earlier, compared with 4.8% in February. The 20-city index gained 5% year-over-year, identical to the increase in February.

Hot tech cities continued to see huge price increases, including San Francisco, where prices increased 10.3% and Denver, where they increased 10% year-over-year. Despite fears that the fall in oil prices would hurt the Texas housing market, Dallas posted 9.3% year-over-year gains.

Seasonally adjusted, the 10-city index rose 0.9% in March from February and the 20-city index rose 1%. The national index rose 0.1% in March.

• U.S. FHFA Home Price Increase Eases

The U.S. House Price Index from the Federal Housing Finance Agency (FHFA) increased 0.3% during March (5.2% y/y) following a 0.6% February rise, revised from 0.7%. The three-month gain in prices declined to 5.0%, below the 8.3% rate of growth three months earlier.