<img alt="" src="https://secure.365insightcreative.com/791016.png" style="display:none;">

Weekly Transportation Update: Existing Home Sales Trend Upward After Long Fall

Posted by The FTR Experts on 3/27/23 12:23 PM

Sales of existing homes surge in February after a year of decline. 

  • Durable manufactured goods orders hold steady excluding transportation equipment.
  • Knight-Swift to buy U.S. Xpress, establishing a truckload fleet of about 25,000 tractors.
  • The spot market for truck freight sees a largely status quo week.
  • Intermodal volumes remain weak as saber-rattling begins at west coast ports.

Tags: Economy, WTU

Key Takeaways

  • Federal Reserve raises interest rates 0.25-point.
  • Sales of existing homes surge in February.
  • Sales of new homes rise after downward revision.
  • Mortgage rates fall for the second week in a row.
  • New orders for durable goods are stable.
  • Diesel prices fall for the seventh straight week.
  • Knight-Swift to buy U.S. Xpress for $808 million.
  • Trucking spot rates and volume change little.
  • General freight revenues fall sharply in 2022Q4.
  • Intermodal is still weak due to the Lunar New Year.
  • Rail carload volume treads water.
  • Norfolk Southern testifies again on Capitol Hill.


In a light week for economic news, the focus continued to be on the tension between containing inflation and fears of an emerging banking crisis. On Wednesday, the Federal Reserve’s Federal Open Market Committee (FOMC) raised the target funds rate a quarter point and issued a statement that confirmed its focus on fighting inflation.

Saying that the U.S. banking system “is sound and resilient,” the FOMC acknowledged that “recent developments” – i.e., the collapse of Silicon Valley Bank and troubles with a few others – likely would lead to tighter credit conditions that would “weigh on” economic activity and inflation. However, it said that the extent of those effects is uncertain and that it remains committed to a policy of maximum employment and 2% inflation over the longer run.

Sales of existing homes

After 12 straight months of m/m decreases, sales of existing single-family homes surged 15.3%, seasonally adjusted, in February. The increase is the largest since July 2020 in the early stages of recovery from the contraction. Sales were 19% below the pre-pandemic month of February 2020.

The National Association of Realtors attributed the jump in sales to lower mortgage rates and home prices that are either falling or rising only slightly, depending on the region. Mortgage rates rose in February and early March, but NAR’s sales data is based on closings and, thus, reflects the mortgage rate environment in December and January.

Inventories of homes on the market tightened significantly due to the jump in sales. The supply of homes at the current sales rate fell to 2.5 months from 2.9 in January and is at its lowest level since April 2022. More important, the inventory of homes is well below the pre-pandemic norm.

Sales of new homes

Sales of new single-family homes increased for the third straight month in February, but the Census Bureau revised the preliminary January estimate sharply lower. Sales increased 1.1% to seasonally adjusted annual rate of 640,000. However, the revised January figure of 633,000 was down from the initial estimate of 670,000.

The median price of a new single-family home sold increased 2.7% to $438,200, which is about 32% higher than February 2020. The supply of new homes at the current sales rate was little changed at 8.2 months. While down from last summer and fall, inventories relative to sales are high otherwise.

Mortgage rates

The average rate on a 30-year fixed-rate mortgage fell to 6.42% from 6.6% for the second straight decline after five weeks of increases. Freddie Mac attributed the recent declines to financial market turbulence and said lower raise should bolster purchasing as the spring homebuying season begins.

Orders for durable manufactured goods

As is often the case, new orders for transportation equipment skewed figures for total durable manufactured goods, although the effect in February was small compared to December and January.

Total new orders declined 1%, seasonally adjusted, but orders excluding transportation equipment were flat. Total orders had jumped 5.1% in December only to fall 5% in January due to swings in aircraft orders. New orders for core capital goods – non-defense capital goods excluding aircraft – ticked up 0.2%.

New orders for durable goods excluding transportation equipment and for core capital goods have largely flattened out since August. However, the Census Bureau data is not adjusted for pricing, so it does not account for producer-level inflation that was strong in 2021 and the first six months of 2022.

Although official inflation-adjusted data is not available, inflation clearly has had a huge impact on order totals. For example, if we adjust core capital goods orders data based on the Producer Price Index for private capital equipment, new orders generally have been declining gradually since the end of 2021 and are barely above pre-pandemic levels. Nominal new orders for core capital goods, however, are holding at essentially record levels and in February were nearly 23% above February 2020.

Diesel and petroleum prices

The national average price of diesel fell 6.2 cents to $4.182 a gallon during the week ended March 20. Prices were down in all regions. Over seven straight weeks of decreases, diesel has fallen nearly 44 cents a gallon. Since hitting a record of $5.81 in June, prices have risen in just eight of 39 weeks, and the average price has plunged nearly $1.63 a gallon. Diesel prices in the latest week were down about 95 cents from a year earlier.

The prospects for continued price decreases are uncertain as underlying factors are sending mixed signals. Distillate inventories declined notably in the latest week to their lowest level since mid-January, although distillate production was stable.

Crude prices have moved lower over the past couple of weeks, however. On March 17, West Texas Intermediate closed at $66.74 a barrel, which was the lowest price since early December 2021. Since then, prices have edged slightly higher but have closed above $70 a barrel only once.






Submit a comment

All comments are reviewed for approval and will not show up automatically. 

Sign up to receive our State of Freight TODAY posts. Select notification preference below.



View recent posts:



Search commentaries:



      Submit a question:

      You ask. FTR Experts answer.