New orders for durable goods produced by U.S. factories rose 7.8 percent in November to a level of $103.5 billion, after dropping 2.6 percent the month before, the Commerce Department reported yesterday.
Orders for nondefense capital goods -- items bought by businesses as part of their capital investment programs -- rose 8.2 percent in November, all but wiping out an 8.8 percent decline in October.
Analysts saw the orders figures as additional evidence that a recession is not imminent, despite the much slower pace of economic growth since the middle of 1984. Some economists had begun to fear that a lower level of orders for nondefense capital goods could be the forerunner of a substantial slowdown in investment in 1985.
Less encouraging to analysts was a drop in new home sales of nearly 11 percent in November, despite declining interest rates. The drop, the sharpest in nearly three years, was also reported by the Commerce Department.
However, the decline in new home sales, to a seasonally adjusted rate of 591,000 units, followed rises of 0.9 percent rise the previous month and 16.5 percent in September. Meanwhile, sales of existing homes climbed 9 percent for the month.
The net effect, noted Jack Carlson of the National Association of Realtors, was that "single-family home sales were up 5 percent in November."
Industry observers attributed the decline in new homes sales to a variety of factors, none of which are expected to have a long-term depressing effect.
"We don't think it was terribly surprising or particularly alarming," said Warren J. Dunn of the Mortgage Bankers Association. He noted that in a climate of declining interest rates, many people "were holding off, waiting for rates to bottom out."
Dunn also noted that prices of new homes jumped from an average of $94,700 in October to $101,000 in November, and "any time you get a price increase, it's going to affect peoples' buying decisions."
Dunn added that he expects a resurgence in the early part of this year, as interest rates remain at relatively low levels.
Carlson said the figures "suggest that home buyers in November were more likely to purchase existing homes than new homes." He said he thinks that is because declining interest rates have a greater effect on the existing-home market, which is more dependent on market-rate financing. Builders, he noted, can combat high interest rates by "buying down" buyers' mortgages.
The Commerce Department figures showed new home sales in November 7.1 percent below the same period a year earlier. The total for the first 11 months of 1984, however, was 4.3 percent higher than for the same period in 1983. The November decline was the largest since sales plunged 18.4 percent in January 1982.
The department said 355,000 single-family houses were for sale at the end of November, a supply of 7.3 months.