- New Home Sales for May fell to 915K versus estimates of 924K and a downwardly revised 930K in April.
- Consumer Confidence for June fell to 103.9 versus estimates of 105.0 and 108.5 in May.
BOTTOM LINE: Purchases of new homes in the US dropped in May, Bloomberg reported. The median price of a new home fell slightly in May to $236,100 from $238,200 a year earlier. The supply of new homes at the current sales pace rose to 7.1 months’ worth from 7 months in April. Sales fell 11% in the Northeast, 7.3% in the South and 1.9% in the West. Sales soared 31% in the Midwest. I continue to believe overall home sales are stabilizing at relatively high levels by historic standards. However, new home construction will remain muted through year-end as homebuilders work down inventories.
An index of consumer confidence in the US fell this month as gasoline prices remained elevated. The present conditions component of the index fell to 127.9 from 136.1 the prior month. The expectations component fell to 87.9 from 90.1. The proportion of Americans that expect their incomes to rise over the next six months rose to 18.7% from 18.5% the prior month. As well, those expecting more jobs in six months rose to 14% from 13.6% the prior month. Gasoline prices are 28% higher that at the beginning of the year. Depressed sentiment in the northern part of the country is still skewing the overall gauge. Confidence in the Northeast Central region(70.7) remains at levels last seen during the major bear market lows of 2002-2003. I still expect confidence to make new cycle highs later this year as gas prices fall substantially, interest rates move back down, stocks rise further, home sales stabilizes at relatively high levels, wages continue to significantly outpace inflation and unemployment remains historically low.
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