Housing robust, though manufacturing production slows
June 24, 2005
The housing market in the United States remained robust in May according to new data, but orders for durable goods were lower than expected.
The US housing market remained at just below record levels. New home sales rose by 2.1 percent in May and are expected to remain at present levels for the time being, at least until mortgage rates rise significantly.
Additionally, the strong tempo of home building has begun to slow down the rise in new home prices, and resale prices may begin to slow down soon as well as supply has begun to rise.
Meanwhile, one analyst has said of the durable goods data that the slowdown in new orders indicates that a slowdown in production could be on the way. This could be compensated for, however, if there are orders that have not yet been filled.
Durable goods orders were up 5.5 percent overall in May, but most of that growth was due to a 165 percent increase in civilian aircraft orders. Disregarding that sector, orders were down by 2.3 percent.
The biggest decline in orders came in computers, where orders fell by 7 percent. Machinery orders fell by 1.9 percent, and non-defense capital goods shipments fell 0.7 percent.
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