US home sales fall, but consumer confidence hits 6-year highTuesday 25 March 2014 18.52
Sales of new US homes hit a five-month low in February, but a surge in consumer confidence to a six-year high in March suggested the economy was regaining momentum after being held back by severe weather.
Other data today showed solid gains in house prices, which should boost household wealth and support consumer spending.
An unusually cold and snowy winter disrupted economic activity at the start of year.
New home sales fell 3.3% to a seasonally adjusted annual rate of 440,000 units, the lowest level since last September, the Commerce Department said.
January's sales were revised down to a 455,000-unit pace from a 468,000-unit rate.
Last month's drop brought new home sales in line with other data such as home resales and building activity that have offered a downbeat picture of the housing market.
Some of the housing slowdown has been blamed on the harsh weather.
But the sector, the main channel through which the Federal Reserve has sought to stimulate the economy via monthly bond purchases, lost momentum last summer following a run-up in mortgage rates.
In a separate report, the Conference Board said its index of consumer attitudes rose to 82.3, the highest since January 2008, from 78.3 in February.
"Overall, consumers expect the economy to continue improving and believe it may even pick up a little steam in the months ahead," said Lynn Franco, director of economic indicators at the Conference Board in a statement.
A dwindling supply of homes for sale and soaring house prices have also weighed on housing. But a recovery is expected later this year as household formation accelerates after abruptly slowing in 2013.
The lack of houses for sale is keeping prices supported.
A separate report showed the S&P/Case-Shiller composite index of home prices in 20 metropolitan areas rose 0.8% in January on a seasonally adjusted basis. It followed a similar increase in December. Prices rose 13.2% from a year ago.
Last month, new single-family home sales in the Northeast tumbled 32.4%, the biggest decline since October 2012, indicating severe weather continued to hurt activity. Sales fell 1.5% in the South, which experienced harsh weather. They surged 36.7% in the Midwest, but fell 15.9% in the West.
Though the supply of new houses on the market hit the highest level since December 2010, inventory remains low. At February's sales pace it would take 5.2 months to clear the supply of houses on the market.
That was up from five months in January and the most since last September. A supply of six months is normally considered a healthy balance between supply and demand.