New Home Sales Ease while confidence falls
WASHINGTON – New home sales in May fell more than expected while consumer confidence in June hit a 10-month low amid worries about jobs and the business climate, adding to signs of sluggish economic growth this year.
“These are numbers that are consistent with a slowing down in activity, a moderation on the consumption side,” said Steven Wieting, an economist with Citigroup Global Markets, Inc., in New York.
Sales of new U.S. homes fell 1.6 percent last month to an annual rate of 915,000 from a downwardly revised rate of 930,000 in April, the Commerce Department said on Tuesday. Analysts had been looking for May new home sales of 925,000.
While sales fell, prices rose. The median sales price of a new home climbed 1.5 percent in May to $236,100 from $232,700 in April. That marked a reversal for new homes from April, when prices fell a record amount but sales rose strongly.
However, adding to the gloomy picture for housing, a measure of existing U.S. single-family home prices showed a decline in April, extending a string of negative annual returns that started in January, according to Standard & Poor’s/Case Shiller home prices indexes released on Tuesday.
As woes deepened for the housing sector, the second-largest U.S. home builder, Lennar Corp. (NYSE:LEN – news), posted a quarterly loss, forecast a loss for the current quarter, and warned the housing market could tumble further.
The drag the struggling housing market has created for the broader economy looks set to persist, analysts said.
“Housing’s contribution to (economic) growth will be negative in both the second quarter and the third quarter,” said Steven Wood, chief economist at Insight Economics in Danville, California.
Stocks rose as investors snapped up share in sectors likely to weather any slowdown in growth, and on lower oil prices. The Dow Jones industrial average was up 0.4 percent, to just over 13,433 in mid-day trading on the New York Stock Exchange.
Treasury debt prices fell on profit-taking before an auction of two-year notes. Currency trading was little affected by the data as investors looked ahead to the outcome of Federal Reserve policy meeting on Thursday.
Consumer confidence in June fell more than expected.
The Conference Board said its index of consumer sentiment fell to 103.9 this month, the weakest since August 2006, from an upwardly revised 108.5 in May. Economists polled by Reuters had been looking for a reading of 105.5.
Also on Tuesday, the Federal Reserve Bank of Richmond said its composite manufacturing index rose to 4 in June from -10 in May.
Early in the day, data showed chain store sales growth slipping last week. Redbook Research said chain store sales rose only 1.4 percent last week from a year earlier, while the International Council of Shopping Centers and UBS Securities said sales rose 1.7 percent for the week versus a year ago.