Pending Home Sales Rise, Railroads Reach Sick Leave Accords, Durable Goods Orders Fall
Pending Home Sales Rise
Pending sales under contract for single-family homes rose 8.1% in January from the prior month, marking the second consecutive monthly increase and a rare positive sign for the U.S. housing economy after months of declines for completed sales.
However, pending sales were down 24.1% from year-earlier levels in all regions, suggesting there is still much room for improvement in demand, according to the National Association of Realtors trade group.
NAR Chief Economist Lawrence Yun said the January bump in pending sales was a result of factors including improved affordability as mortgage rates declined during December and January, though rates began heading back up in the second half of February.
“Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur,” Yun said in a statement Monday. “But an annual gain in home sales will not occur until 2024.”
The Commerce Department reported earlier this month that overall housing construction starts declined 4.5% in January from the prior month, as multifamily starts declined 4.9%. Trade groups and analysts report that the housing industry faces lingering headwinds including affordability, high mortgage rates and inflated material costs.
Railroads Agree on Sick Leave
Two of the nation’s largest rail carriers reached agreements with prominent labor unions regarding paid sick leave, an issue that threatened a costly strike and logistics chaos before walkouts were averted by the federal government in late 2022.
BNSF announced pacts reached late last week with members of the Transportation Communications Union and National Conference of Firemen & Oilers. Norfolk Southern announced similar agreements reached with the firemen’s group and Brotherhood of Maintenance of Way Employees, with deals in total giving four new days of paid sick leave to more than 3,000 workers.
“We hope these are the first in a series of new agreements across our other crafts who did not already have individual paid sick days prior to the recent national bargaining round,” BNSF said in a statement Feb. 23. Norfolk Southern said Feb. 24 that its new agreements with union workers were intended to “further improve their quality of life.”
Dean Devita, president of the firemen and oilers union, lauded the two rail giants for addressing the sick leave issue but noted other large carriers have yet to sign similar pacts. “It makes more sense reaching agreement across the bargaining table, but if not, we will do what we have to do,” Devita said in a statement.
Sick leave was among key issues that spurred several rail unions to refuse signing on to contract terms reached last fall by industry and government mediators, designed to head off a rail strike that analysts said could cost the economy $2 billion a day. Congress in November passed a White House measure forcing both sides to accept general terms including expanded sick time, the details of which are still being hashed out by some carriers and unions.
Durable Goods Orders Decline
New orders for manufactured durable goods, deemed a reliable indicator of future industrial space demand, declined 4.5% in January from the prior month to $272.3 billion, the Commerce Department reported Monday.
Durable goods are items with a useful life of at least three years, including appliances and factory equipment, and new orders have now declined in two of the past three months, interrupted by a 5.1% rise in December. Transportation equipment led January’s decline in orders, dropping 13.3% from the prior month to $92.8 billion.
Shipments of durable goods declined 0.1% from the prior month to $277.2 billion, following 16 consecutive months of increases. Transportation equipment also led the shipments decline, down 1.7% to $92.2 billion.
Non-defense new orders for capital goods, such as factory equipment, declined 15.3% to $83.9 billion, with shipments for that category declining 1% amid slowing demand. Defense-related capital goods posted a 1.2% decline in shipments but a 3.8% boost in new orders for the month, and new orders for defense aircraft and parts rose 5.5%.
The Commerce Department’s Census Bureau gathers data through monthly surveys of manufacturers. Most manufacturers saw minimal change in new orders and shipments in January from the prior month.
Elgin Development Group
Lou Hirsch, CoStar
- February 28, 2023