July 31, 2007—The GDP recovered from a weak 1^st quarter by increasing a larger-than-expected 3.4% in the 2nd quarter. The housing market continues to struggle. Sales of both existing and new homes decreased in June, falling 3.8% and 6.6%, respectively. Lastly, durable goods increased 1.4% in June.
 
Gross Domestic Product
The 'advance' estimate by the BEA indicates that the GDP grew 3.4% in the 2^nd quarter, rebounding from the anemic 0.6% increase in the 1st quarter. GDP growth was driven by an improvement in the trade balance as well as stronger government spending. The weak housing market continues to be a negative weight, but its drag on growth is gradually decreasing. On a year-ago basis, the GDP has increased 1.8%, well below its growth potential of 3.0%.
 
Existing Home Sales
Sales of existing homes fell 3.8% in June to 5.75 million units (seasonally adjusted annual rate). Furthermore, existing home sales are down 11.4% on a year-over-year basis. The only bright spot in the report was the median sale price for an existing home, which increased 3.3% to $230,100. Lastly, inventories remained very high at 8.8 months of supply and are up 27.5% compared to June 2006.  

New Home Sales
New home sales plunged 6.6% in June to 834,000 units (seasonally adjusted annual rate). Furthermore, sales on a year-ago basis are down 22.3%. The median sale price of a new home was $237,900 in June, down from $241,000 the previous month. Lastly, inventories increased 5.4% to 7.8 months of supply and compared to a year ago are up 21.9%. The housing market continues to struggle and new home sales should remain weak going forward.

Durable Goods
New orders for durable goods increased 1.4% in June following an upwardly revised 2.3% decrease in May. New orders for core capital goods, which signify business investment in equipment and software, fell 0.7%. Inventories and unfilled orders both increased for the month, rising 0.2% and 1.5%, respectively. Lastly, shipments of durable goods fell 1.1%.