There were two important reports on the economy released this morning. First, data from the U.S. Census Bureau showed that sales of new single-family homes in America rose by 6.9 percent in October to a seasonally adjusted annual rate of 685K units. That was significantly better than economists expected and the 3rd-largest monthly increase of 2017. Regionally, new home sales rose across the country in October but the biggest gains were found in the Northeast (+30.2%) and the Midwest (+17.9%). The inventory of new single-family homes in October lifted to 282,000, and months’ supply slid to 4.9 based on the current sales pace. The slight uptick in inventory helped lower the median selling price of new houses sold last month to $312,800, although this is still 3.3 percent higher compared to October 2016. More importantly, this was another solid report on new home sales growth in America, which is encouraging since this particular economic metric tends to head sharply lower ahead of a recession.
Elsewhere, a report from the Federal Reserve Bank of Dallas showed that business activity in the southern region of the country slowed in October, as the headline index fell to 19.4, the lowest reading since August. Under the hood, measures of production, capacity utilization, new orders, shipments, employment, hours worked, and wages/benefits all deteriorated last month. However, capital expenditures improved in October, as did most forward-looking (six months ahead) gauges. Further, the headline index is still well above the pre-election level and near the high end of the post-recession range. Other regional activity measures have shown a similar pattern recently, suggesting that manufacturers in America remain relatively upbeat about the prospects for their companies in the near-future. This has been supported by generally positive comments from surveyed managers.
Sources: Econoday, U.S. Census Bureau, ZH, FRBD, FRBSLPost author: Charles Couch