New Home Sales Set Another Record

New single-family home sales set a new record in March with a 12.2% m/m jump to 1.431M following the upwardly revised 8.2% increase in February. Consensus estimates had been for sales of 1.190M.

Last month's sales gain was led by a 21.9% jump in the Midwest (13.6% y/y) and a 13.8% (18.6% y/y) rise in the South. Sales in the West also rose 9.9% (5.0% y/y) but in the Northeast sales fell 8.9% (+1.2% y/y) after a jump one third higher in February.

The median price of a new single family home gave back all of the prior month's gain and fell 9.3% to $212,300 (+1.3% y/y).

The figures from the Census Department reflect homes sold.

The cost of business cycles and the benefits of stabilization from the Federal Reserve Bank of Chicago is available here.

The Conference Board's April Index of Consumer Confidence about matched Consensus expectations and fell a sharp 5.1% to 97.7 from an upwardly revised March level. It was the steepest one month decline since last August and pulled Confidence to the lowest level since November.

During the last twenty years there has been a 51% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.

The April index of consumer expectations dropped sharply to the lowest level since August 2003. Expectations continued to grow that in six months there would be fewer jobs.

The present situation index fell (+25.7% y/y) for the first month in the last six. Jobs were viewed as hard to get by 23.3% of survey participants, down from the late 2003 high of 35.1%.

The Conference Board’s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

Chain store sales dipped 0.3% last week following a 1.0% pop the week earlier according to the International Council of Shopping Centers (ICSC)-UBS survey. With one week to go, the average of sales in April is 0.5% higher than during March.

During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.

The leading indicator of chain store sales from ICSC jumped 0.6% (0.6% y/y), the largest gain in ten weeks.

The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

Imbalances in the U.S. Economy from Federal Reserve Board Governor Donald L. Kohn can be found here.

The latest monthly data and results of the most recent quarterly survey of industrial trends were released today by the CBI (Confederation of British Industries). Britain's manufacturing sector has been depressed for some time, as evidence by the first chart showing the monthly percent balances of increases less decreases in new orders. Rarely have increases in orders outweighed decreases and then only by a very small margin.

There is little comfort in the monthly data for the sector. The percent balance of decreases over increases in new orders in April of 24% is the largest since November, 2003.

Nor is the survey encouraging. While the survey revealed that the respondents were slightly less pessimistic in the current quarter compared to the first quarter, they were generally more pessimistic concerning the current status and outlook for new orders, output, prices and unit costs. The percent balances for new orders and output over the past three months are shown in the second chart.

Although the manufacturing share of gross value added has declined from 24% in 1985 to 16% in 2004, a slowdown in manufacturing activity should have a significant impact on growth of the total economy.