U.S. Durable Goods Orders Firm, Revisions Positive

New orders for durable goods added 1.4% last month to the upwardly revised 6.4% jump in May. Consensus expectations had been for a 1.0% decline.

Strength in the factory sector was quite apparent in a 2.6% rise in durable goods orders outside of the transportation sector as well as a 0.9% gain in these orders in May, revised up from a 0.2% decline reported initially. Computer & electronic equipment orders jumped 8.6% (19.0% y/y) after a 1.5% May rise, initially reported as a 1.2% decline. Orders for communication equipment surged 18.3% and were one third higher than last year.

Machinery orders jumped 3.7% (11.9% y/y) but with a 0.1% decline (+13.1% y/y) electrical equipment orders gave back a piece of the very much upwardly revised 3.4% spurt in May.

Orders for aircraft & parts fell just 22.1% (+49.8% y/y) following the more-than-doubling of orders in May while orders for motor vehicles & parts slipped 0.1% (-2.3% y/y).

Non-defense capital goods orders slipped due to the decline in aircraft but less aircraft orders posted the strongest monthly gain since January. Nevertheless, shipments of nondefense capital goods less aircraft fell 0.4% (+10.1% y/y). The decline in shipments followed gains of 1.2% and 1.5% during the prior two months.

Durable inventories fell 0.3% (+7.1% y/y) for the second monthly decline in the last three while May's gain was revised lower to just 0.1%.

Unfilled orders jumped another 2.6% (9.8% y/y) but outside of the transportation sector backlogs rose a lesser 1.6% (9.2% y/y). The ratio of backlogs to shipments outside of transportation rose to the highest level in over a year.

New single-family home sales jumped 4.0% in June to 1.374M on top of the upwardly revised 3.0% gain in May. The figure set a new record and sales during the last six months averaged 1.288M, up 7.7% from last year's first six months. Consensus estimates had been for sales in June of 1.30M.

Sales rose across the country but the notable 7.2% rise in the Northeast lifted sales 14.1% versus last year.

The median price of a new single family home slipped for the second consecutive month. The 5.5% decline to $214,800 (-0.4% y/y) followed upward revisions to prior months' figures.

The figures from the Census Department reflect homes sold.

Total mortgage applications fell 5.8% last week, the fourth decline in the last six weeks according to the Mortgage Bankers Association. The decline lowered the average level in July 0.2% below June.

Last week's decline was led by a 11.4% drop in applications to refinance and they are down 21.8% from the peak in early June.

Purchase applications slipped only 0.7% w/w but it was the fifth decline in the last six weeks. Nevertheless, the average level in July remained 0.9% ahead of June. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

The effective interest rate on a conventional 30-year mortgage crept up to 5.98% while the effective rate on a 15-year mortgage also rose to 5.63%.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.