WASHINGTON (6/25/14)--New single-family home sales soared above expectations in May, rising 18.6% from April levels and posting their quickest pace since mid-2008, according U.S. Census Bureau numbers released Tuesday.
While new-home sales numbers are volatile, and often revised, analysts still put at least some stock in the initial reading of a 504,000 annual rate gain, as recent months have produced much weaker results (Economy.com June 24).
The largest jump came in the Northeast, which saw its sales skyrocket by 54.5% after a dismal start to the year. The region has increased its new-home sales pace by 36.6% since this time last year.
In the South and West, sales have jumped 12% and 33% year-over-year respectively, with the Midwest as the only region not to post healthy gains.
While inventories of new single-family homes climbed 17% in May year-over-year, inventories were left unchanged from April, pushing down supply, tightening the market and pressing upward on home prices, which according to several other reports released Tuesday, had slowed in April.
Among those reports, the Federal Housing Finance Agency reported Tuesday that four of nine census regions posted declines in home prices in April, when sales activity had bottomed out after a sluggish first quarter.
Annual increases recorded by the S&P/Case-Shiller Home Price index slowed in April by nearly 2 percentage points as well.
But with the uptick in sales in May, the median sales price for a new single-family home jumped 7% year-over-year to $282,000, according to Moody's.
Though, "the share of homes sold above the median price has increased 2 percentage points since last May, which accounts for some of the increase in the media house price," Moody's analyst Celia Chen said (Economy.com).
WASHINGTON (6/25/14)--Consumer confidence has climbed to its highest level since 2008, according to the Conference Board, which reported Tuesday that its overall gauge of consumer confidence rose 3 points to 85.2 in June.
Shoppers also feel better about their present financial situations, as the present situation survey component climbed nearly 5 points to its highest rate in more than six years.
Further, nearly one-quarter of consumers said they believe business conditions are "good," while the percentage of respondents who believe conditions are unfavorable for business dropped 1.8%.
"Many times these types of swings in the Conference Board measure are associated with a stronger labor market, but in this case, buyers indicated more enthusiasm over current business conditions, which is the conduit by which a stronger labor market will evolve," said Nate Kelley, Moody's analyst (Economy.com June 24).
Bankrate.com also reported this week that its financial security index had rebounded in June as well. (See related story: Half of Americans have little to no emergency savings: Bankrate.)
Despite the improvement in consumer confidence, however, feelings over income prospects have stagnated. From the survey, 72% of people expect their income to remain flat over the next six months, while those who believe their incomes will rise dropped more than 2 percentage points.
The Bureau of Economic Analysis reported Tuesday that personal income actually inched up 0.8% in the first quarter, with income climbing in 46 states. Year-over-year, personal income rose 3.5% in the quarter.
Earnings made up about half of the increase in personal income, with particularly strong quarters recorded for professional services, construction and finance.
Income growth was also spurred by the expansion of Medicaid and the rollout of the Affordable Care Act, which added $22.3 billion to the overall income total.
"As special factors wane and job growth continues to pick up, growth in nominal incomes will be more than double its first quarter rate by the end of the summer," said Marisa Di Natale, Moody's analyst.