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Home Sales Rise, Factory Orders Up

By JEANNINE AVERSA,

Posted: 2007-08-24 10:23:08

WASHINGTON (Aug. 24) - Sales of new homes perked up, while factory orders took off in July, raising hopes that the economy can safely weather financial turmoil that has shaken Wall Street.

The Commerce Department reported Friday that new-home sales rose 2.8 percent in July, after falling 4 percent in June. The increase in July lifted sales to a seasonally adjusted annual rate of 870,000 units. A second report showed that orders to factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.

Both reports were better than analysts expected. They were forecasting home sales to fall and were calling for a much smaller, 1 percent gain in factory orders.

In the housing report, the improvement in sales reflected gains in the West and the South, where sales went up by 22.4 percent and 0.6 percent respectively. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.

Even with the overall increase in home sales for July, sales are down a deep 10.2 percent from a year ago, underscoring the toll of the housing slump.

The median price of a new home, meanwhile, was $239,500 in July, up from $238,100 in July a year ago. The median price means half sell for more and half sell for less. The average home price, however, dropped to $300,800 in July, down from $311,300 for the same month last year.

Friday's reports offered a spot of relief amid recent turbulence on Wall Street, which has darkened investors' feelings about the nation's financial prospects.

Fears that the worsening housing slump and credit crunch could hurt the economy have gripped Wall Street investors in recent weeks, causing stocks to swing wildly.

"The downside risks to growth have increased appreciably," Fed Chairman Ben Bernanke and his colleagues concluded on Aug. 17. It was a much more sober assessment than they had offered just 10 days earlier when they met to examine economic conditions and interest rates. Against this backdrop, the central bank sliced the rate it charges banks for loans, a narrowly tailored move aimed at propping up sagging financial markets.

If problems persist, the Fed could opt for more aggressive action: reducing an important interest rate, called the federal funds rate, on or before Sept. 18, the Fed's next regularly scheduled meeting. The Fed hasn't cut this rate in four years. It is the Fed's main tool for influencing overall economic activity.

The funds rate, the interest banks charge each other on overnight loans, has stayed at 5.25 percent for more than a year. A cut to the funds rate would bring lower interest rates for millions of people and businesses.

In the manufacturing report, the 5.9 percent increases in new orders for "durable" goods followed a 1.9 percent rise in June. Durable goods are costly manufactured items expected to last at least three years.

Gains were widespread. Orders went up for machinery, automobiles, metal products, airplanes and communications equipment. That blunted a drop in demand for computers, as well as electrical equipment and appliances.

The pickup in demand for manufactured goods comes against a backdrop of a growing global economy, which has produced a bigger appetite for some U.S. exports.

Orders for automobiles rose 9.8 percent in July, the most since January 2003. Demand for primary metals, including steel, increased 7.9 percent, the biggest rise since July 2004. Orders for communications equipment soared 20.7 percent, the most since March 2006. Demand for airplanes for commercial use rose 12.6 percent. Airplane orders for defense purposes increased 15.8 percent in July.

Demand for computers, however, dropped 4 percent in July and orders for electrical equipment and appliances fell 1.2 percent - two weak spots in an otherwise strong report.

Overall, the figures suggest that capital spending by businesses is weathering the financial storm so far. Credit problems, however, worsened in August, so upcoming reports on manufacturing and housing will offer more insight into companies' spending as well as the state of the housing market.

Spending by businesses and consumers is a key ingredient to the country's overall economic health.

Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. All active hyperlinks have been inserted by AOL.

2007-08-24 08:37:36

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XTCOFGOLD 08:29:54 PM Aug 25 2007

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The Fed will cut the intrest rates in sept...

piersonrealtygrp 07:10:21 PM Aug 24 2007

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Try finding a lender to Jumbo Loans in California or Arizona. Any loan over $417,000 is almost impossible to find at a decent rate unless you think 13% is great.

Rock and roll to Wyoming, Idaho and Oregon were the action is.

Cash is King!!! time to follow the vultures!!!!

cmitc0728 04:41:27 PM Aug 24 2007

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oNE THING WE DO KNOW - STOCKBROKERS ARE GETTING RICH REGARDLESS OF THE ECONOMY

robert9702 04:07:22 PM Aug 24 2007

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I will agree with skiappraiser. I have been appraising in central Florida for many years. Based on current MLS data, as of 4:01 p.m on Friday August 24, 2007, there are 15935 single family homes on the market in Orange County Florida (Orlando) and there have been only 505 closings of the same since August 1, 2007.....DO THE MATH. The media holds the country by the short hairs. They, (whomever "they" are) know they can manipulate our thinking according to what we hear or see in these daily reports. I WANT our market to stabilize, unfortunately when there is a 30 month supply of homes it's going to take some time to absorb.

expertortho 04:03:48 PM Aug 24 2007

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jbluhm1951 is right. Strong economy. Market actually valued lower today by almost any index than in Dec 2002 at its "bottom" ... the overreacting market is definitely a great value now. Almost all the realtors are now saying that at least the "lookers" are out again.

jbluhm1951 01:38:07 PM Aug 24 2007

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I beleive the numbers are close to being accurate. Wall Street always over-reacts to everything, good or bad. People who work in construction are still building houses, maybe they do not have as many up coming housing starts as they had two years ago, but still in many parts of the country builders have plenty to bulid. Commercial building seems to be replacing some of the residencial building this year in my area, the SouthEast. The real story is the credit problem people have in this country. Credit card companies are ripping off the poor with high card interest. The economy is stronger today then it was 4 years ago. Housing has slowed some, retail very little, and the service sector is doing just fine. Today is a great time to buy beaten down stocks especially retailers, and tech co.

Skiappraiser 12:35:59 PM Aug 24 2007

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http://www.mfrmlshelpdesk.com/pdf_files/stats/4YrBoardStatHistory_ORRA.pdf
Mid Florida Regional Multiple Listing Service
This information shows the value of local and national real estate organizations.

Skiappraiser 12:04:14 PM Aug 24 2007

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Markets vary based on demand, supply. Metro Orlando, Florida's two main counties (Orange/Seminole) stats from ORRA MLS board:
June 2007 - active SFR 25,923 units, closed SFR 1,431 units
June 2006 - active SFR 18,437 units, closed SFR 2,841 units
June 2005 - active SFR 3,710 units, closed SFR 3,119 units

Builder inventories/sales are partially in these statistics. Condo market is not in these statistics.
www.downtownappraisal.com

pushupsbootcamp 11:18:48 AM Aug 24 2007

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PEACE BE WITH YOU by RAIMONDO SALOMONE has been reviewed as,
“One of the most provocative novels in years. An important book.”
It’s the riveting story of three generations of Italian-Americans and the tenuous relationship they have with their Catholic priest. Search for it at Amazon or BarnesandNoble.com Read an excerpt at the author’s website,

www.RaimondoSalomone.com

HOW FAR WILL A PRIEST GO TO KEEP A SECRET?

ReallyAppraising 11:16:48 AM Aug 24 2007

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I love the guys so sure in their own arrogance that say they don't believe the numbers provided because in their small little sector of the world, home sales are and permits are slow. There is a big picture here. If you have traveled to all 50 states in the last month and physically counted all the permits and home sales in July, then you can discount the numbers. Some markets are still very slow. Builders have overstocks of inventory, this is true, but not every market is bad. Oregon is booming and some other markets are booming. Overall these booming markets may be the reason the overall numbers are better than expected.

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