Consumer Confidence Rises
The Conference Board reported that consumer confidence rose to 83.8 in May from 81.0 in April. The rise was in line with market expectations, but the distribution was odd, with current conditions falling 7.3 to 67.9, while expectations rose 9.6 to 94.4. The current conditions decline largely reflects the continued weakness in the labor market, where hiring is scarce and layoffs are still too prevalent.
The report is overall in line with expectations, and suggests consumers are continuing to spend. More importantly, it suggests the tax cuts will be spent quickly.
Existing Home Sales Rise 5.6%
Sales of existing single-family houses rose 5.6% in April, to an annual rate of 5.84 million. The rise was greater than expected by the market.
The median sales price rose to $163,400, up 6.8% on the year. Inventory levels rose 10.3%, holding the months supply to 5.1.
Sales rose in all four regions. Sales are up 3.2% from a year ago, and are at their fifth-highest level in history. Low mortgage rates should keep sales strong, since they have dropped from April's average 5.81%.
New Home Sales Up 1.7%
Sales of new single-family homes rose 1.7% in April, to 1.028 million. This is up 12.2% from a year earlier.
The market had expected a small decline after the high March report. This is the third-highest month for new home sales. Inventories of unsold homes remain tight, with a 3.9 month supply; the normal is 6.
The median sales price declined slightly, to $185,100 from $185,400 in March and $187,100 a year ago. This reflects regional sales patterns, with sales strongest in the low-cost Midwest and down in the Northeast. Record low mortgage rates are keeping sales strong. We at S&P expect the strength to continue.
From Standard & Poor's MarketScope