Durable Goods Orders and New Home Sales Soar

- Durable Goods Orders for March rose 6.1% versus estimates of a 1.8% increase and an upwardly revised 3.4% gain in February.
- Durables Ex Transportation for March rose 2.8% versus estimates of a 1.0% increase and a 1.1% fall in February.
- New Home Sales for March rose 1213K versus estimates of 1110K and 1066K in February.

BOTTOM LINE: Orders for long-lasting goods rose the most in 10 months in March as US businesses invested in new equipment to meet demand, Bloomberg said. Companies are using record profits to replace outdated equipment, add workers and factory space. Bookings for non-defense capital goods excluding aircraft, a gauge of future business spending, increased 3% in March versus a .8% fall in February. According to economists, business spending probably increased at a 13% annualized rate during 1Q, the fastest since the second quarter of 2004. Orders for computers and electronic equipment rose 7.5%, the best since September 2004. Unfilled orders, a measure of future production, surged 2.8%, the largest increase since last November. I expect increased business spending to help offset slower consumer spending going forward.

Sales of new homes in the US rose 13.8% in March, the most in 13 years, led by demand for less-expensive houses, Bloomberg said. The median price dropped 2.2% from the same month last year to $224,200. The fall in the median selling price was the first since 2003 and reflects a surge in the sales of homes priced between $150,000 and $299,999 and few sales of high-priced homes. The number of unsold homes declined to 5.5 months’ worth at the current sales pace from 6.3 months the prior month. Sales rose 36% in the West, 11% in the Midwest, 6.9% in the South and 4.7% in the Northeast. I still expect housing to slow to more healthy sustainable levels through year-end.