Sales of new homes in the United States increased 20% year-on-year in May and a measure on consumer confidence spiked too, data showed on Tuesday ahead of the release later this week of a key inflation reading watched by the Federal Reserve
WASHINGTON (Pakistan Point News / Sputnik - 27th June, 2023) Sales of new homes in the United States increased 20% year-on-year in May and a measure on consumer confidence spiked too, data showed on Tuesday ahead of the release later this week of a key inflation reading watched by the Federal Reserve.
Sales of freshly-constructed US homes were up 12.2% in May from April and 20% higher from a year ago, according to a joint report from the US Department of Housing and Urban Development and the US Census Bureau.
The housing numbers were evidence that the new construction market was being boosted by exceptionally low inventory of existing homes for sale. Sales of existing homes have been down the past few months because homeowners with ultra-low mortgage rates were reluctant to sell and buy at a much higher rate.
On the consumer confidence front, the Conference board said a measure that looks at how consumers feel about the economy right now rose to 155.3 in June from 148.9. That was the highest reading of its kind in nearly two years.
A confidence gauge that looks six months ahead, meanwhile, moved up to 79.3 in June from 71.5, the highest for this year.
The consumer confidence reading shows that Americans think inflation will continue to slow and expect prices to rise 6% next year, the lowest since the end of 2020, the Conference Board data showed.
Taken together, the home sales and consumer confidence readings show that although consumers have been complaining over the past year about the economy, they continued to spend as though the economy was in good shape.
The consumer reaction is important because it is likely to be reflected as well by the Personal Consumption Expenditures (PCE) index reading for May due on Friday.
The PCE numbers are closely monitored by the Fed, which has has signaled more rate hikes ahead after pausing on its monetary tightening in June.
In the 12 months through April, the headline PCE index, as well as core PCE, which strips out volatile food and energy prices, ran well above the Fed's 2% target.
Many economists predict the Fed will add another quarter percentage point at its next decision on rates on July 26, bringing them to a peak of 5.5% as it tries to further tame inflation.
