Consumer Confidence Depressed, New Home Sales Rise

- Consumer Confidence for May fell to 57.2 versus estimates of 60.0 and a reading of 62.8 in April.

- New Home Sales for April rose to 526K versus estimates of 520K and 509K in March.

BOTTOM LINE: Confidence among US consumers fell to the lowest level in more than 15 years, Bloomberg reported. The Present Conditions component fell to 74.4 from 81.9 in April. The Expectations component fell to 45.7 from 50.0 the prior month. The average price of regular unleaded gasoline rose to a record $3.94 a gallon yesterday, according to data from AAA. Those planning to purchase a large appliance remained at 32.10, the same as April. Confidence in the northern part of the country continues to skew the overall gauge. Confidence in the Northeast Central region, where most media outlets and hedge funds are headquartered, fell another 16% to an extraordinarily depressed 34.80. I still think the current “US negativity bubble” will lose some air over the coming months as energy prices fall, credit turmoil ends, housing fears subside, the job market improves, stocks rise, election uncertainty ends, fiscal/monetary stimuli take hold, the US dollar rises, inflation decelerates and interest rates remain low.

New Home Sales in the US unexpectedly rose in April, Bloomberg reported. Sales rose 3.3% to an annual pace of 526,000 from a 509,000 rate the prior month. The median sales price last month rose 1.5% from April 2007 to $246,100. The supply of homes at the current sales pace fell to 10.6 months’ worth from 11.1 months in March. The number of houses completed and waiting to be sold fell to 181,000, the fewest since July of last year. Purchases soared 42% in the Northeast, rose 8.3% in the West and gained 5.8% in the Midwest. They fell 2.4% in the South. According to BankRate.com, the average 30-year fixed mortgage rate is currently 5.81%, down from 6.12% in March and down from 6.43% in June of last year. The Homebuyer Affordability Index is currently 130.20, which is up from a low of 99.6 in July 2006 and at the best level since April 2004. I think it is very likely home sales have now seen their lows and will trend modestly higher through year-end.