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July 29, 2008--The housing market remains troubled, as both new and existing home sales continue on a downward slide. Orders for durable goods posted an increase in June as firms continue to invest in core capital goods.

 

New Home Sales
New home sales decreased 0.6% in June to 530,000 units. However, inventory fell to 10.0 months, down from 10.4 months in May. The median price of a new single family home increased to $239,000 in June after decreasing in May. The latest figures confirm that the housing market is still correcting itself and a quick recovery is unlikely due to tightened lending standards and continuing uncertainty in financial and credit markets.

 

Existing Home Sales
According to the National Association of Realtors, existing home sales fell 2.6% in June. Sales of single-family homes decreased while sales of condos increased; discounted prices may be attracting buyers back into the market. The median existing-home price is off 6.1% compared to a year ago. A weak housing market is expected this year, as continued concerns over credit quality and unstable financial markets will keep standards for mortgage underwriting high, thus keeping demand low.

 

Durable Goods
Durable goods orders surged 0.8% in June following a 0.1% gain in May. Excluding transportation, the orders grew 2% over the previous month, including a 1.4% increase in core capital goods. Moreover, new orders and shipments both rose during the month, at 0.8% and 0.5%, respectively. June's numbers encouraged analysts as they generally predicted a smaller increase or an outright decline. This report is consistent with other indicators of the manufacturing sector--such as the ISM survey, industrial production, and capacity utilization--which also showed improvement in June.