New home sales inch higher, Consumer spending up and Boeing (BA) may fix required fix for Dreamliner

Markets wavered on Wednesday after new home sales were up for the third month in row in October. The Commerce Department reported that sales rose 0.7% to a seasonally adjusted annual rate of 458,000. There was a large downward revision of September’s data, however. The month was previously reported to show 467,000 units but was revised lower to show 455,000 units. October’s data missed analysts’ expectations of 472,000. New home sales count for nearly 8% of the overall housing market. When compared with this time last year, sales are up 1.8%. The average price of homes this month skyrocketed up 15.4% over this time last year to a record $305,000. Lawrence Yun, the National Association of Realtors chief economist, said, “In addition to low interest rates, buyers entering the market this autumn are being lured by the increase in homes for sale and less competition from investors paying in cash. Demand is holding steady but would be more robust if it weren’t for lagging wage growth and tight credit conditions that continue to hamper those individuals looking for relief from rising rents.”

A separate report showed that consumer spending was up slightly in October. The Commerce Department announced that spending was up 0.2% in October after remaining flat in September. Consumer spending accounts for nearly two-thirds of economic activity in the U.S. Michael Gapen, a senior economist with Barclay’s, said, “We think growth will moderate in the fourth quarter. I’m not reading anything incredibly negative into this.”

Shares of the Boeing Company (BA) were trading slightly higher after the U.S. Federal Aviation Administration announced they would be proposing a required fix for the company’s Dreamliner 787-8. The company has had several complaints against it for “failures of proximity sensors.” If the sensor failures happen it could cause the plane to veer off the runway while landing on short runways or during bad weather. If the proposed requirement went through it would affect 15 planes located in the United States. The FAA said, “We have received numerous reports of failures of the proximity sensor within the slat skew detection mechanism assembly (DMA) leading to slats up landing events.”

That’s all for today,

Warren Gates, Normandy Research

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