New home sales slowed to a seasonally adjusted annual rate (SAAR) of 673,000 in April, falling -6.9% from March’s 723,000 SAAR, but up +7.0% from the 629,000 SAAR for April 2018. The median home price rose to $342,200, up +8.0% from the previous year, and the supply of new homes increased from 5.6 months to 5.9 months, nearing the 6 month mark that indicates a balance between a buyer’s and a seller’s market. The South had 55% of the new homes for sale, and sales in that region fell by a 29,000 SAAR accounting for over half of the national drop, with additional drops for the West (28% share of homes, -17,000 SAAR) and Midwest (13% share of homes, -7,000 SAAR), while new home sales increased by +3,000 in the Northeast, which comprised only 4% of the market.

The IHS Markit Flash composite Purchasing Managers’ Index (PMI) output index for May fell from 53.0 to 50.9, which indicated the slowest expansion of business activity in 36 months. The services component of the composite index dropped from 53.0 to a 39 month low of 50.9, as service output prices fell for the first time since February 2016 due to intense competition and lowered inflation which limited input cost increases. The manufacturing component of the composite index fell from 52.7 to 50.8, a 116-month low, with new orders declining for the first time since August 2009. However, manufacturing output prices increased slightly despite an only weak rise in input costs that reflected competition from suppliers and the possibility of excess capacity developing.

Largely due to a -25.1% (-$3.07 billion) drop in new civilian aircraft orders, overall new orders for durable goods fell -2.01% (-$5.37 billion) to $248.4 billion in April. Removing the drag from transportation, which also included a -3.4% (-$2.1 billion) drop in motor vehicle orders, new durable goods orders were unchanged for the month at $163 billion. Orders for core capital goods, which exclude both defense and transportation and serve as a measure of business investment, fell -0.9% to $68.77 billion from a downwardly revised +0.3% gain in March, but remained +2.6% higher than in April 2018.