Tuesday, June 27, 2006

Existing Home Sales Fall Slightly, Consumer Confidence Rises

- Existing Home Sales for May fell to 6.67M versus estimates of 6.6M and 6.75M in April.
- Consumer Confidence for June rose to 105.7 versus estimates of 103.8 and 104.7 in May.
BOTTOM LINE: Sales of previously owned homes in the US fell in May to the lowest since January as higher mortgage rates sapped demand, Bloomberg said. The supply of homes for sale is now up to May 1997 levels. The median price of an existing home rose 6% in May from a year earlier to $230,000. Sales fell 4.2% in the Northeast and 3.8% in the Midwest. They rose .4% in the South and rose .7% in the West. This is more evidence of a “soft-landing” in housing.

Confidence among US consumers rose more than forecast in June as Americans’ outlook for the job market improved, Bloomberg said. The expectations component of the index rose to 87.6 from 85.1 the prior month. The employment component of the index rose to 15.6%, the highest since August. 3% of consumers said they plan to buy a home, up from 2.9% the prior month. I continue to expect consumer confidence to make new cycle highs over the intermediate-term as stocks rise, energy prices fall, irrational pessimism lifts further, Iraq improves, the job market remains healthy, long-term rates remain low by historic standards and inflation decelerates.

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