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The Census Bureau reported that new home sales were up 16.6% in May to a 676,000 yearly sales rate, and were up +12.7% from a year previously, with a median price of $317,900 and 5.6 months of sales inventory. However, existing home sales fell -9.7% in May to a seasonally adjusted annual rate of 3.91 million, down -26.6% from a year previously. Unsold existing housing inventory was up +6.2% to 1.55 million units, but down -18.8% from a year previously, bringing unsold inventory up to a 4.8 month supply from 4.0 months in April. Existing home prices were up +2.3% to a median of $284,600, continuing 99 straight months of pricing gains. A spokesman for the National Association of Realtors noted that their report covered the strictest point of the coronavirus lockdown, and projected that May was a cyclical low point and that sales would rebound.
Downward revisions to personal consumer expenditures (PCE), private inventories and exports were balanced by upward revisions to nonresidential fixed investment, keeping the third estimate for Q1 GDP at a -5.0% decline. PCE is a primary driver of GDP and Q1 GDP only reflected the beginning of the pandemic lockdown in March. PCE income was boosted in April (+10.8%) largely by government payments, but much of that was saved rather than spent as the personal savings rate increased to 32.2% and spending fell -12.2%. Without the federal stimulus, May’s PCE income was down -4.2% and the savings rate dropped to 23.2%, but spending increased by +8.1% as lockdown restrictions began to ease. Spending for Q1 was down an estimated -$831.3 billion, and even with the reversal in April, spending for April and May is estimated to have dropped by -$647.2 billion.
New orders for durable goods were up +15.8% in May to a seasonally adjusted annual rate of $194.4 billion after declines of -18.1% in April and -16.7% in March, but were down -13.6% for the year. Much of the month’s increase was due to a +80.7% (+$20.9 billion) increase in transportation orders, including a +$6.1 billion increase in motor vehicle orders and a turnaround to a +$3.1 billion increase in civilian aircraft orders after cancellations pushed down orders by -$8.6 billion in April and -$16.1 billion in March. Orders excluding transportation were up +4.0% (+$5.7 billion), but were still down -4.0% for the year. Core capital goods, which exclude defense and aircraft orders and serve as a measure of business investment, were up +2.3% after declines of -6.5% in April and -1.3% in May, but remained -2.5% below orders a year ago.
Wednesday July 1 – ISM Manufacturing PMI
Thursday July 2 – Employment Situation