Economic Highlights for the week ended April 25, 2008 Economic Week in Review: Home sales remain in basementVanguard 4/25 - The week's economic reports were light in volume, but heavy in spirit—at least for the housing market. New-home sales continued to hit historic lows. While existing-home sales were still poor, some of the data were promising. Durable-goods orders declined, but not as steeply as they had in the previous two months. For the week, the S&P 500 Index rose 0.5% to 1,398 (for a year-to-date total return of –4.8%). The yield of the 10-year U.S. Treasury note rose 14 basis points to 3.91%. New home sales skidded to new lowsVanguard 4/24 – The Census Bureau reported that new-home sales sank 8.5% in March to 526,000 annualized units, well below the 580,000 expected. The sales slump is now the worst since 1991, and a deeper look only revealed more woes. Compared with a year ago, sales nose-dived nearly 37%. All four regions of the nation slid downward, but the Northeast was off the most. The decline in sales contributed to a subsequent rise in months of available inventory and a drop in prices. Median home prices fell 13% on a year-ago basis. Bear Stearns – This report shows no signs of stabilization in the new home sales market as sales have fallen for five straight months and are dropping at a faster rate on a three-month annualized basis versus on a 12-month change basis. In addition, inventories of unsold homes in relation to sales are at levels not seen since the 1981-82 recession. Existing-home sales offered mixed resultsVanguard 4/22 – The National Association of Realtors reported that existing-home sales declined 2.0% in March. While the median price for a home also dropped—almost 8% from a year ago—and the months of inventory rose to 9.9, the news wasn't all bad. Sales weren't falling as quickly as they did earlier this year and late in 2007. Both the Northeast and West recorded month-to-month gains in sales, although the Midwest and South saw losses. Also, condominium sales rose for the second straight month. Bear Stearns – With total existing home sales down 18.4% over the last year and down 4.4% over the last six months at an annual rate, there is some evidence of an easing in the pace of decline in home sales. However, since these data are based on contract closings, this report is a lagging indicator of housing market trends. Durable-goods orders down, not outVanguard 4/24 – Durable-goods orders dropped 0.3% in March, according to the Commerce Department. Despite falling for the third straight month and missing expectations of a 0.6% gain, the data weren't entirely negative. The 0.3% decline was an improvement over the previous two months and was mostly attributable to a fall in motor vehicle orders and an auto industry strike. Those factors excepted, new orders climbed 1.5% and shipments gained 0.2%. A 1.1% rise in inventories raised concern; even inventories excluding transportation were up 0.6%. The economic week aheadVanguard 4/25 - The coming week offers a wide range of economic news beginning with Tuesday's report on consumer confidence. Set for Wednesday are releases on employment costs and the gross domestic product; markets will also be paying close attention to the April meeting of the Federal Open Markets Committee. Thursday's docket is full, with information on personal income, construction spending, and manufacturing. Friday brings data on the employment situation and factory orders. |