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Market Matters

With global trade and Brexit headlines pausing this week, the market had a chance to shift focus back on some economic data such as Durable Goods and Home Sales data before looking ahead to the Fed meeting next week.

 

Existing Home Sales

Existing Home Sales for September posted the first decline in three consecutive months, down -2.2% to a 5.38mln unit selling rate. Single-family home sales dropped by -2.6% to 4.78mln, while multi-family sales rose by +1.7% to 600k. All four regions saw a decline in sales, led by the Midwest -3.1%, Northeast -2.8%, the South -2.1%, and the West -.9%. The median price for all existing sales last month was $272,100, which is still up 5.9% from a year ago. Inventory fell -2.7% annually to 1.83mln units, now a fourth straight decline, and equates to a 4.1 month selling pace to clear all supply. The National Association of Realtors says that land and labor shortages are contributing to shortfall and lack of inventory "is preventing home sales growth potential."
 

FHFA Home Price Index

The FHFA Home Price Index was up by +.2% in August vs. expectations of a +.4% increase. Looking YoY now, prices are up +4.6% in August vs. +5.0% in July. For the nine census divisions, seasonally adjusted monthly price changes from July 2019 to August 2019 ranged from -.8% in the East South Central division to +.9% in the New England division. Looking at the 12-month changes, we see all positives in the report, ranging from +3.9% in the Middle Atlantic and Pacific divisions, to +6.5% in the Mountain division.

 

Durable Goods Orders

Durable Goods Orders for September declined by -1.1%, now the biggest decline in four months. Expectations for today’s print were for a drop of -.7%. Transportation looked to be the kicker here as there were larger declines in autos (-1.6%) and planes (-11.8%). If we strip out transportation, we see a drop in orders of only -.3%. Capital goods orders non-defense 
ex-aircraft (indication for business investment) fell by -.5%, coming in below expectations of -.1%. Capital goods shipments, which translate into some GDP calcs, fell by -.7%, below -.2% estimates. Overall, a sluggish report this morning that, importantly, showed further weakness in business investment.

 

New Home Sales

New Homes Sales for September fell by -.7% to a 701k unit selling rate. We also see a downward revision to the originally posted 713k rate for August, now at 706k. Although we see some lower numbers, sales have exceeded the 700k mark in the last three out of four months. Looking YoY, September sales are up +15.5%, while total sales for the year are up +6.9%. The inventory of new homes for sale dropped to 321k units from a prior 323k units in August, which represents about a 5.5-month supply. Finally, the median sales price is 
down -8.8% from a year ago and now at its lowest level since back in February 2017, at $299k.

 

MARKIT U.S. Manufacturing

The pre-lim read for the October MARKIT U.S. Manufacturing report saw an increase to 51.5 from a previous 51.1, coming in better than estimates of a 50.9 print. Services rose to 51 from 50.9, while the composite PMI saw a gain to 51.2 from 51. Within those numbers, services saw some employment drop further into contraction, while manufacturing improved for the second straight month now. Overall, the headline is still very neutral between contraction and growth, which suggests it is too early to make any predictions for the months ahead.