Markets Flat on Mixed Durable Goods and Pending Home Sales

Andrew Klips  |

The Commerce Department said Monday morning that durable goods orders jumped by $10.0 billion, or 4.6 percent, in December from November, boosted in part by a 10 percent rise in orders for aircrafts. With December’s rise, durable goods orders, items from toasters to airplanes meant to last for more than three years, have risen in seven of the past eight months, a sign that the economy is gaining strength and that companies didn’t hold back as much as feared as the fiscal cliff loomed during the month.

The reading topped economist predictions of a 2.0 percent rise in December.

Meanwhile, the November figure for all manufacturing industries were upwardly revised to a 0.8 percent increase. Compared to December 2011, new orders were up 4.1 percent last month.

Excluding transportation and defense, new orders increased by 1.3 percent and 1.2 percent, respectively.

Nondefense new orders for capital goods in December increased $2.7 billion, or 3.8 percent, to $73.8 billion. Defense new orders for capital goods in December increased $8.7 billion or 110.4 percent to $16.5 billion.

Investment plans, a sector that is closely watched as a barometer of future growth of businesses, registered only 0.2 percent gains, from an upwardly revised 3.0 percent gain in November.

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The durable goods report kicked-off a big week for economic data. Shortly after that news hit the streets, the National Association of Realtors reported that its Pending Home Sales Index contracted in December to 101.7 percent from 106.0 percent in November.

Economists predicted that pending home sales, those for which contracts are signed, but not yet closed, would increase 0.3 percent, following a 1.7 percent rise in November. Supply levels have steadily been becoming a concern as inventories are dwindling. Last week, the NAR reported that listed inventory dropped to a 4.4-month supply, the lowest level since May 2005 when there was a 4.3-month supply.

"The supply limitation appears to be the main factor holding back contract signings in the past month," said NAR chief economist Lawrence Yun.

Last week, the U.S. Census Bureau reported that new home sales fell by 7.3 percent in December to a 369,000 annual rate while the NAR said existing home sales slid by 1 percent to a seasonally adjusted 4.94 million annual rate.

The figures may have slinked back some last month, but the housing market showed far greater strength in 2012 than the year prior and is expected to remain a bright spot for the economy this year. Compared to 2011, median new housing prices rose by 7.2 percent. Sales of pre-owned houses, condominiums and co-ops were up by about 13 percent for the year and prices increased more than 10 percent during the year.

The markets are relatively flat with the mixed data. Just after noon, the Dow Jones is off by 10 points and the S&P 500 is 1 point lower, but the Nasdaq has edged ahead by 9 points.

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