NEWS / Foreign Exchange

September New Home Sales ??“ Gain Is Suspect and Subject to Revision

September New Home Sales ??“ Gain Is Suspect and Subject to Revision

Sales of new single-family homes rose 4.8% to 770,000 in September, following major revisions to sales estimates in the June-August period which amounted to a net downward revision of 167,000. Although there was a small increase in purchases of new homes in September, the level of home sales in September is far below the earlier estimate of home sales in August (795,000 original estimate vs. current estimate of 735,000). On a year-to-year basis, sales of new single-family homes are down 25.0% from a year ago and 45% lower than the peak sales mark of 1.389 million in July 2005. The increase in home sales during September is suspect because major homebuilders such as Centex and Pulte and other minor builders announced losses this week, and reportedly wrote down billions of dollars pertaining to the value of land they own and slashed down prices of homes.

Wilting Durable Goods Orders - Precursor of More to Come?

Durable goods orders fell 1.7% in September, following a 5.3% drop in the prior month. The 38.7% drop in orders of durable defense items was the major cause for the drop in durable goods orders. Excluding defense, bookings of durable goods increased only 0.7%. Orders of non-defense capital goods rose 4.4% in September after a 12.2% decline.

Jobless Claims Remain on Weak Side

Initial jobless claims fell 8,000 to 331,000 during the week ended October 20. Seasonally unadjusted initial jobless claims moved up 5.0% from a year ago, marking the seventh weekly reading that is positive in the past twelve weeks. Continuing claims, which lag initial claims by one week, rose 7,000 to 2.530 million and the insured unemployment rate held steady at 1.9%. The main message is that additional readings of initial jobless claims upwards of 320,000 should leave the markets and Fed more concerned about the already weak labor market.