Consumer confidence declines slightly as new home sales fall 8.6%
REAL ECONOMY BLOG | April 26, 2022
Authored by RSM US LLP
Consumer confidence eased in April even as expectations for the next few months improved, the Conference Board reported on Tuesday.
The consumer confidence index was down slightly in April, to 107.3 from 107.6 in March, remaining below the pre-pandemic level.
The index, well known for its correlation with employment, saw the labor differential subcomponent—the difference in the survey between jobs that are plentiful and jobs that are hard to get—drop from the record of 47.1 in March to 44.6 in April. The subcomponent suggests a likely moderation in job gains for the month, which will be released by the Bureau of Labor Statistics next week.
Short-term inflation expectations were one of a few bright spots in the report as expectations for price changes in the next 12 months declined to 7.5% from 7.9% in March.
Buying intentions for automobiles, home and major appliances in the next six months inched up while plans for vacations declined on the month.
New home sales
In a separate report by the Census Bureau, sales of new homes in March fell by 8.6% amid rapidly rising mortgage rates. The average 30-year fixed-rate mortgage advanced to 5.11% last week, according to data from Freddie Mac.
Sales dropped in all four major regions with the largest decline coming from the South, which was down by 47,000 on an annualized rate.
Lower demand coupled with more supply coming online increased inventory to 6.4 months at the current selling pace from 5.6 months in February.
The median price for new homes set a record in March at $436,700, a 21.4% increase from a year ago.
With the Federal Reserve’s aggressive plan for raising interest rates, we expect housing demand to continue to cool down sharply, especially when declines in prices are nowhere in sight.
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This article was written by Tuan Nguyen and originally appeared on 2022-04-26.
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