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New home sales off sharply
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June 29, 1999: 9:00 p.m. ET
But Consumer Confidence Index surges to highest level since October 1968
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NEW YORK (CNNfn) - Sales of new homes cooled off in May, while the Consumer Confidence Index in June climbed to its highest rate in more than 30 years, according to two economic reports released Tuesday.
Sales of newly built single-family homes fell 5.1 percent last month to a seasonally adjusted annual rate of 888,000, the Commerce Department said. The government also revised the April rate to 936,000, down sharply from the previously reported 978,000.
Analysts polled by Reuters had expected the May rate to come in at 956,000. The bigger-than-expected drop is a possible sign that consumer demand for new housing may be starting to slow.
Meanwhile, the Consumer Confidence Index, which measures Americans' attitudes about jobs and purchases, rose for its eighth consecutive month, surging even higher than analysts predicted.
The index, published by the New York-based Conference Board, came in at 138.4, up from a revised 137.7 in May and approaching the all-time high of 142.3 set in October 1968. Economists surveyed by Reuters had predicted an increase to 136.3 for this month's index.
The index is an important economic gauge because consumer spending accounts for two-thirds of the nation's overall economic activity. The index compares results with its base year, 1985, when it stood at 100.
"Great expectations are continuing to fuel consumer confidence," said Lynn Franco, associate director of the Conference Board's Consumer Research Center.
Analysts said the data is a sign that consumer spending continues to surge ahead.
"The financial wealth that has been created is unprecedented," Joseph LaVorgna, senior economist at Deutsche Bank Securities, told CNNfn. "Even if the stock market, for argument's sake, leveled off here, there's been so much wealth built up that we really can feel spending for some time."
The index showed, however, that consumers have a less optimistic view of business conditions than they did a month earlier. About 40 percent viewed business conditions as "good," down from more than 44 percent in May.
Forty-six percent of respondents said jobs are plentiful, down slightly from 48 percent a month earlier.
The data had little effect on the bond market, which carefully monitors economic data, especially as it awaits the meeting of Federal Reserve policymakers scheduled to kick off later Tuesday.
The price of the benchmark 30-year Treasury was up 7/32, trimming the yield to 6.07 percent, just after noon. Before the 10 a.m. ET reports were released, the bond was trading flat for a yield of 6.09 percent.
Meanwhile, the Dow industrials climbed about 37 points to 10,691.56 in early afternoon trading.
-- from staff and wire reports
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