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Registered Investment Adviser Caleb Lawrence 

Despite generally positive though questionable data the major averages fell in early trade entering the final hour with modest losses. Durable Goods Orders beat expectations in September with a 2.2% gain on a second large jump in nondefense capital goods.

The real eye opener today was the New Home Sales figure that surged 18.9% in September to 667,000 units annualized shattering expectations for a 1.1% decline. The largest monthly sales gain in over 25 years, led by a 33.3% advance in the Northeast, while the hurricane ravaged South increased 25.8%. Month’s supply fell to 5 while the median price increased 3.3% to $315,800. These gains erase a number of national and regional declines in the last few months and then some. Will see if this turns out to be a statistical aberration, because that is what it looks like, and I wonder if existing home sales will follow as they have been weak of late.

The latest home sales data for the Bay Area and the Central Coast shows mixed results. Sharp declines were reported in Santa Clara County -23.5%, San Mateo County -22.4%, Monterey County -16.9% and Sacramento County -16.8%. Santa Cruz County bucked the trend with an 18.2% gain, during September, as per the California Association of Realtors. Pending interest rate increases, don’t hold your breath, and changes in mortgage regulations were blamed for the sales declines, don’t tell that to the folks that bought new homes.

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