Weekly Economic Update 04-25-25: Leading Economic Indicators; New Home Sales; Existing Home Sales; and Durable Goods
New home sales surged in March, while existing homes tumbled and the prices for the two are virtually the same.
The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.
The response to last week’s post was overwhelming, and I want to thank all the new members and supporters and say “welcome” to all the new subscribers.
It seems to be often the case that the week after I get a lot of new subscribers, there is very little economic data on which to report. And it happened again this week, with only a few economic releases out between Monday and Friday. Most of the recent news surrounds the fluctuations in the stock market, and I am loath to comment very much on stocks lest I get too close to giving what could be construed as investment advice. I do NOT give investment advice. Ever.
That said, it has been a while since I discussed gold and its performance. Given the light data week, it seems like as good a time as any to bring an update on the metal.
In a letter to Jean-Baptiste Le Roy, Benjamin Franklin famously wrote, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” Of course, he probably stole the phrase from Daniel Defoe’s The Political History of the Devil (1726), who, in turn, may have borrowed it from Christopher Bullock’s comedic play, The Cobbler of Preston (1716). But regardless of its origin, I would like to add to it.
Nothing can be said to be certain, except death, taxes, and the Federal Reserve printing money.
Of course, there was no Federal Reserve in Franklin’s time, and if there had been, I have no doubt he would have made this minor addition himself.
Because of this most certain of realities, the price of gold, over time, will invariably go up. I remember back in 2010 when the price of the yellow metal hit $1,250. A family member was looking to sell their gold because “there was no way the price would ever rise beyond $1,250!” I offered to buy every single ounce they had at $1,250. They laughed and considered me a fool as I handed them a check and took possession. But I understood what they clearly did not…that the inflation of the money supply would not only continue, but would no doubt accelerate, and holding some gold is a good long-term hedge against that inevitable inflation.
I understand that there are a lot of people who don’t like gold because it “doesn’t produce anything.” They argue that gold is “not an investment,” it “pays no dividends,” and that the “value of gold is propped up by a social construct that insists it's special.”
I’m not going to try to argue any of those points. People tend to be “dug in” with respect to their position on gold. I’ll just point out that over the last 10 years, not only has gold been a hedge against the Fed’s inflationary policies, it has actually outperformed the S&P 500…even before the recent panic-induced declines.
And yes…the recent declines are completely panic-induced. If the tariffs were implemented across the board at 25%, the total cost would be about $800 million. At one point, the loss in the market since the inauguration was $10 trillion. Yeah, I’d say that is an overreaction.
I often get asked what I think about gold at the current price. Rather than answer, by way of response, let me ask another question…in five years, do you think the price of gold will be more or less than it is now? Given the current policies of the Federal Reserve, I feel pretty confident I know the answer to that one.
Leading Economic Indicators
You know it is a low data release week when I resort to reporting on the index of leading economic indicators (full release here). Long-time readers will know that I became somewhat disgusted with these indicators over the past two years as they utterly failed in their sole purpose for which they were designed. However, I suppose in their defense, when they were developed, the creators didn’t envision that the government would run $2 trillion annual deficits to keep us out of a recession.
The leading index fell 28 straight months, but the economy never turned down. Recently, the index has been trending down again, but in March, it dropped .7 points, the largest monthly decline since October 2023. The index is now at 100.5 - the lowest level since the COVID collapse in April 2020.
The biggest negative contributors to the index were consumer sentiment and stock prices - not surprising given the recent moves in the stock market and the uncertainty surrounding the administration’s trade policy.
According to The Conference Board, “the US LEI for March pointed to slowing economic activity ahead.” Does it really? Because I have to tell you, between 2022 and 2025, there certainly wasn’t “slowing economic activity” despite the leading index collapse. It is interesting, however, that they went on to say, “the data does not suggest that a recession has begun or is about to start.” Well, at least there’s that.
New Home Sales
The 30-year mortgage rate fell about 20 basis points in March for an average of 6.65%. In the overall scheme of things, that isn’t really a very big drop. However, apparently it was big enough to cause a surge in new home sales, which jumped 7.4% in the month, far beyond the 1.3% that was expected (full release here). On a year-over-year basis, sales were up 6% to an annual rate of 724K units.
Another driver of sales may have been prices, which fell for the second consecutive month. The median price of a new home in March was $401K, a decline of 2.9% from February.
Unfortunately, this surge in new home sales isn’t likely to last as rates have moved up considerably in April and are now hovering at 7%. Evidence of this can be seen in the falloff of new mortgage applications, which are down sharply over the past two weeks as mortgage rates have risen.
Existing Home Sales
New home sales may have had a great month in March, but the same can not be said for existing home sales, which posted their weakest March since the 2009 financial crisis, falling 5.9% (full release here). On a year-over-year basis, existing home sales are down 2.4%. That decline was much worse than expected.
As with new homes, on a seasonally-adjusted basis, the median price fell to $403,600. That was the third consecutive monthly decline in the median price. Interestingly, the median new home price is now below the median price of an existing home…a situation that historically doesn't occur, but it has happened three times in the last eight months.
Regionally, sales declined across the board, but the largest drops were in the West and South. Existing homes remained on the market for 36 days on average in March, compared to 42 days in January.
Durable Goods
Finally, this week, we got the latest data on durable goods orders, and the numbers were astonishing (full release here). Durable goods orders rose 9.2% in March…10.4% if you exclude defense orders, which fell 9.4%. That is the sixth consecutive month that defense orders have fallen. On an annual basis, durable goods orders were up 10.9% - the highest since January 2022.
However, before we get too excited about a manufacturing renaissance…the increase was totally driven by transportation orders…specifically commercial aircraft and parts, and even more specifically, Boeing. Boeing reported 192 new orders in March. Durable goods excluding transportation were flat in March, and up only 2.2% from the previous year.
Turning from new orders to actual shipments, shipments of non-defense capital goods fell 1.9% in March after being virtually flat in February. This is important because this piece of data is used in the equipment investment part of the gross domestic product calculation. As of this writing, the Atlanta Fed GDPNow model is predicting first quarter GDP of -2.5%. However, most professional forecasters are predicting that the first quarter will be positive, but less than 1%.
One More Thing…
Again, the support following last week’s post was amazing! Special thanks to Beth Truelove and the White County Chamber, who became my second gold-level member! That kind of support will help keep my access to the data sources I need to keep the update going each week.
As always, thank you for subscribing and reading this weekly economic update. If you find it informative, I invite you to share it and click/scan the QR code below to join as a “member” or to buy a coffee or two (or five) and support this effort.
