Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020225.jpg" width="353">
Sales of existing single family homes rose 16.2% m/m, more than expected last month to a new record. Sales rose for the first time in three months. December sales were little revised.
Home sales, which reflect closings on past sales, rose in each of the country&#146;s four regions. 
The average rate on a conventional 30-year mortgage fell to 7.00% last month, about the level of January 2001.
The median price of an existing single-family home jumped to $151,100 (10.2% y/y). December figures were revised up. 

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<th scope="col" class="firstcol">Existing Home Sales (000, AR)</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,040</td>
<td>&nbsp;5,200</td>
<td>14.6%</td>
<td>5,291</td>
<td>5,159</td>
<td>5,193</td>
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Sales of existing single family homes rose 16.2% m/m, more than expected last month to a new record. Sales rose for the first time in three months. December sales were little revised. Home sales, which reflect closings on past sales, [...]

Existing Homes Sales Set Record

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The Conference Board's Index of Consumer Confidence fell 7.2% (-3.1% y/y) to 104.7 during December following a 2.9% November rise, revised from 1.9%. The level of confidence remains up from a low of 97.5 in April. The Action Economics Forecast Survey expected a reading of 112.8 in December. Consumer confidence has been fluctuating between 97.5 and 114.0 over the past two years.

Both components of the index fell this month. The present situation index eased 0.8% (-4.8% y/y) to 140.2 after rising 3.9% in November to 141.4. The expectations index dropped 13.4% (-1.0% y/y) in December to 81, after rising 2.0% in November.

The percentage of respondents assessing business conditions as “good” fell to 19.1% this month after declining to 21.6% in November. It was the lowest percentage in three months. The percentage assessing conditions as “bad” rose to 16.7% from 15.3% in November. The appraisal of labor market conditions improved in December as 37.0% of respondents thought jobs were plentiful, up from 33.6% in November. Jobs were viewed as hard to get by 14.8% of respondents this month following 15.2% in November. This measure has risen steadily this year from 11.0% in January. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) rose m/m to 22.2%, but remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions worsened in December. A lessened 21.7% of respondents expect conditions to improve over the next six months, down from 24.7% in November, while a higher 18.3% expect them to deteriorate, up from 15.9% in November. On employment, 19.1% expect the number of jobs to increase over the next six months versus 22.8% in November. A higher 21.3% respondents expect the number of jobs to decline versus 17.9% in November. A lessened 17.2% expect income to increase in six months versus 20.7% in November. That remained increased from 16.3% in February and compares to 14.3% who expect income to decrease.

The expected rate of price inflation over the next twelve months held at 5.0% in December. It was the lowest since March 2020. Interest rates are expected to rise over the year by 48.5% of respondents, up from 45.5% in November. The percentage of respondents expecting equity prices to increase over the next twelve months fell to 52.9% from 57.2% in November, while the percentage expecting a decline increased to 25.0% from 21.7%.

The percentage of respondents planning to buy a home in December fell to 4.9%, its lowest in four months, from 6.2% in November. Plans to purchase an automobile edged down this month to 11.4% from 13.1% in November.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

**Trends in Work from Home in the U.S.: Insights from Six Datasets** from the Federal Reserve Bank of St. Louis is available [here](https://www.stlouisfed.org/on-the-economy/2024/dec/trends-work-from-home-us-insights-six-datasets).

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- Confidence weakens to lowest level in three months.
- Present situations measure dips, while expectations fall sharply.
- Inflation expectations are unchanged, but interest rate expectations rise.



Consumer Confidence Declines in December; Inflation Expectations Steady

Winnie Tapasanun

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New single-family home sales rose 5.9% m/m (8.7% y/y) to 664,000 units at an annual rate in November following a 14.8% plunge to 627,000 in October (-17.3%, 610,000 initially) and a 6.5% gain to 736,000 in September (+7.0%, 738,000 previously), data from the U.S. Census Bureau showed. The November level reading matched the forecast by the Action Economics Forecast Survey. New home sales, while up 27.9% from the 519,000 low in July 2022, had fallen 35.6% from their peak of 1.031 million in October 2020. The rise in November sales accompanied an increase in the average 30-year fixed-rate mortgage to 6.81% in November, the highest since July, from 6.43% in October. It had since registered 6.60% in the December 12 week and 6.72% in the December 19 week, according to Freddie Mac.

By region, month-on-month new home sales gained in November in two of four major regions. Sales in the Midwest jumped 17.3% (10.0% y/y) to 88,000 in November, the highest level since June 2021, after a 3.8% decline to 75,000 in October. Sales in the South rebounded 13.9% (13.6% y/y) to 417,000, the third m/m gain in four months, after a 22.5% October slump to 366,000. To the downside, sales in the Northeast plummeted 41.0% (-11.5% y/y) to 23,000 in November, the lowest level since August, reversing a 39.3% advance to 39,000 in October. Sales in the West fell 7.5% (-1.4% y/y) to 136,000, the fourth straight m/m fall to the lowest level since February 2023, on top of a 7.0% October decline to 147,000. Notably, the South continued to post the largest level figure (417,000) for new home sales among the four regions.

The median sales price of a new home fell 5.4% (-6.3% y/y) to $402,600 in November after a 1.8% increase to $425,600 in October, registering the first m/m fall since August and the lowest level since February 2022. The median sales price had fallen 12.5% since its October 2022 peak of $460,300. The average sales price of a new home dropped 7.7% (-0.9% y/y) to $484,800 in November, the lowest level since August, following a 4.9% rise to $525,400 in October. The average price was 10.4% below a high of $541,200 in July 2022. These sales price data are not seasonally adjusted.

The number of unsold new homes on the market rose 2.1% (8.9% y/y) to 490,000 in November, the highest level since December 2007, after a 1.9% increase to 480,000 in October. The latest figure was 5.2% above a high of 466,000 in October 2022. The seasonally adjusted months' supply of new homes for sale fell to 8.9 months in November after rising to 9.2 months in October (highest since November 2022). The latest reading, slightly up from 8.8 months in November 2023, remained above a low of 6.9 months in May 2023.

The median number of months a new home stayed on the market increased to 2.6 months in November, the highest since March, after slipping to 2.4 months in October. The latest number was up from the record low of 1.5 months in both September and October of 2022 but down from 2.7 months in November 2023 and a high of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

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- November sales +5.9% (+8.7% y/y) to 664,000 vs. -14.8% (-6.8% y/y) to 627,000 in October.
- Sales up m/m and y/y in the Midwest and South but down m/m and y/y in the Northeast and West.
- Median sales price drops to $402,600, the lowest since Feb. ’22; avg. sales price falls to a 3-month-low $484,800.
- Months' supply of new homes for sale drops to 8.9 mths. from October’s 2-year high.

U.S. New Home Sales Rebound in November Following October’s Plunge

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New orders for durable goods declined 1.1% (-5.2% y/y) in November following a 0.8% October rise and a 0.4% September decline, according to the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 0.3% decline. The decline reflected a 2.9% drop (-16.1% y/y) in orders for transportation equipment which reversed a 1.8% October increase. Orders outside the transportation sector slipped 0.1% (+1.5% y/y) 	after rising 0.2% in October. Defense orders fell 12.5% (+11.5% y/y) after a 2.9% decline. Nondefense orders eased 0.3% (-6.1% y/y) after a 1.0% rise.

The decline in transportation equipment orders reflected a 6.0% m/m fall in orders for aircraft & parts and a 0.3% easing (+1.6% y/y) in orders for motor vehicles & parts after a 0.5% slip. Orders for electrical equipment & appliances rose 0.4% (4.1% y/y) after a 1.6% gain in October. Orders for computers & electronic products fell 0.7% (+1.4% y/y) after slipping 0.4%. Showing strength, machinery orders increased 1.0% (1.7% y/y) last month following a 0.5% October rise. “Other durable goods” orders held steady (+0.4% y/y) after three straight months of modest increase. Orders for fabricated metal products declined 1.6% (+1.7% y/y) following a 0.2% rise while orders for primary metals improved 0.7% (1.8% y/y) after a 0.4% easing. 

Nondefense capital goods orders declined 0.6% (-18.9% y/y) following a 3.1% October increase. Nondefense capital goods orders excluding aircraft rose 0.7% (1.1% y/y), after slipping 0.1% in October.

Shipments from all manufacturing industries rose 0.2% (1.3% y/y) in November after three consecutive monthly declines. Shipments of durable goods slipped 0.1% (+1.0% y/y), also following three monthly declines. Transportation shipments fell 1.2% (+1.1% y/y) while machinery shipments held steady (-0.1% y/y). Shipments in most other durable goods series were little changed. Shipments of nondurable goods rose 0.5% (1.6% y/y) in November after a 0.2% rise in October.

Unfilled durable goods orders increased 0.3% (2.0% y/y) in November, the fifth consecutive monthly rise. Unfilled orders for nondefense capital goods rose 0.6% for a second month (3.1% y/y) while nondefense capital goods order backlogs edged 0.1% higher (-1.2% y/y) and have fallen sharply since the end of 2022.

Inventories of all manufacturing industries rose 0.3% (0.5% y/y) in November after rising 0.1% in October. Durable goods inventories rose 0.4% (1.1% y/y) after little change earlier in the year while nondurable goods inventories rose 0.2% (-0.5% y/y) after easing for two consecutive months. 

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.


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- Total orders dragged lower by aircraft; excluding transportation, orders are little changed.
- Core capital goods orders improve.
- Unfilled orders & inventories rise.


U.S. Durable Goods Orders Decline Sharply in November

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**The PCE chain price index** edged 0.1% higher in November, following unrevised gains of 0.2% in both of the prior two months. The y/y rise moved up to 2.4% after deceleration in the prior three months. The price index excluding food and energy also inched up 0.1% last month, after two months of 0.3% gain. The y/y rise held at 2.8% in November, up from a 2.7% low throughout Q3. 

**Durable goods prices** held steady (-1.1% y/y) in November, after a 0.1% October uptick. Motor vehicle & prices jumped 0.7% (-1.4% y/y) following a 0.9% rise. Recreational product prices declined 0.6% (-1.4% y/y) last month, after declining in each of the prior three months, while home furnishings & appliance costs were unchanged (-1.4% y/y) as they were in October. 

**Prices of nondurable goods** were unchanged both m/m and y/y last month after declines in each of the prior three months. Clothing prices rose 0.1% (0.9% y/y) after falling 1.4%. Food prices rose 0.2% (1.4% y/y) following no change and gasoline & oil prices rose 0.5% (-8.6% y/y) after a 1.0% decline.  

**Services prices** increased 0.2% (3.8% y/y) in November, after rising 0.4% in the prior month. Housing & utility prices rose 0.2% (4.6% y/y) after 0.4% gains in the prior two months, and services prices excluding energy & healthcare increased 0.2% (4.2% y/y) in November after a 0.4% gain. Healthcare prices rose 0.2% (2.5% y/y) as did housing & utilities costs (4.6% y/y). Transportation prices declined 0.5% (+1.5% y/y) while hotel & restaurant prices strengthened 0.7% (3.5% y/y). Recreation services costs rose 0.3% (3.3% y/y) after a 0.6% rise.

**Personal consumption expenditures (PCE) **increased 0.4% (5.5% y/y) in November, after a 0.3% October rise, revised from 0.4%. A 0.5% increase had been expected in the Action Economics Forecast Survey. When adjusted for price changes, PCE increased 0.3% (2.9% y/y) last month, after edging 0.1% higher in October.

**Real spending on durable goods** strengthened 1.8% (5.7% y/y) in November, after a 0.2% October rise. Real spending on motor vehicles increased 2.4% (5.0% y/y), after easing 0.3% in October. Real outlays on furnishings & durable household equipment rose 0.6% (4.7% y/y) in November, following a 0.2% decline in September, while real spending on recreational goods & vehicles jumped 2.7% (7.7% y/y) last month, after a 0.4% rise in October. Spending on “other” durable goods eased 0.1% (4.5% y/y) after strengthening 1.3% in October.

**Nondurable goods** spending in real terms improved 0.2% (2.2% y/y) in November, after falling 0.2% during October. Real clothing and footwear purchases jumped 1.3% (2.4% y/y) last month, following a 0.9% gain (+0.6% y/y) in October. Real food & beverage purchases fell 0.3% (+1.2% y/y), after easing 0.1% in the prior month. Real outlays on gasoline & other energy products declined 0.6% (+0.4% y/y), after falling 0.5%. Real spending on “other” nondurable goods rose 0.4% (3.4% y/y) last month, following a 0.6% decline.

**Real spending** on services edged 0.1% higher (2.7% y/y) in November, following two months of 0.2% increase. Real spending on housing & utilities eased 0.1% (0.9% y/y) last month, after holding steady in October, while real healthcare spending rose 0.2% (5.3% y/y), after rising 0.3%. Real spending on food services & accommodations weakened 0.6% (-0.3% y/y) in November, and reversed the prior month’s rise. Real spending on financial services & insurance gained 0.4% (3.4% y/y) after a 0.1% uptick. Real spending on transportation services eased slightly (+2.1% y/y) in November, after a decline of 0.1% in October. Recreation spending strengthened 1.2% (2.1% y/y) after falling 0.5% in October. Spending on “other” services slipped 0.2% (+1.1% y/y) after rising 0.3% in the prior month.

**Personal income** rose 0.3% (5.3% y/y) in November, after a rise of 0.7% in October, revised from 0.6%. A 0.4% gain was expected. Wages & salaries rose 0.6% (5.8% y/y) last month, following a rise of 0.5% in October. Rental income improved 0.1% (5.2% y/y), after a 0.5% October rise. Proprietors’ income edged 0.1% higher (2.4% y/y), following a 0.4% gain in October. Income from assets eased 0.1% (+1.0% y/y), after strengthening 1.0%, and current transfer receipts slipped 0.1% (+8.7% y/y) in November, after rising 0.9% in October. Government social benefits eased 0.1% (+8.6% y/y) in November, after improving 1.0% in the prior month.

**Disposable personal income** increased 0.3% (5.1% y/y) in November, following a rise of 0.7% in October. After adjusting for price changes, disposable income improved 0.2% (2.6% y/y), after gaining 0.5% in October.

**The personal saving rate** slipped to 4.4% in November, after rising to 4.5% in October. The rate remained below a January high of 5.5%. Personal saving fell 1.7% (+0.2% y/y) in November, after rising 10.3% in October.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.


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- Price index held back by steady goods costs and slower services price rise.
- Real spending growth concentrated in goods.
- Disposable income growth slows.


U.S. Core PCE Price Gain Cools in November; Real Spending Rise Picks Up