New home sales, US consumer confidence jump to six-year high
New home sales and US consumer confidence both reached their highest levels in six years. New home sales increased by 18.6 percent to a seasonally adjusted annual rate of 504,000 units, while consumer confidence rose to 85.2.
US consumer confidence jumped to its highest level in nearly 6-1/2 years in June and sales of new homes surged in May, the latest signs that the economy has regained momentum.
The Conference Board said on Tuesday its index of consumer confidence rose to 85.2 from 82.2 in May, amid optimism about the labor market. June's reading was the highest since January 2008.
In another report, the Commerce Department said new home sales vaulted 18.6 percent to a seasonally adjusted annual rate of 504,000 units, the highest level since May 2008. The increase in sales was the biggest since January 1992.
The reports added to data ranging from employment to factory and services sector activity that point to a sharp rebound in growth early in the second quarter after the economy contracted at a 1.0 percent annual pace in the first three months of the year.
The dollar edged broadly higher on the data. Prices for longer-dated US Treasury debt also rose, while homebuilder shares were trading higher on the new home sales data.
Economists had forecast new home sales rising to a pace of only 440,000 units pace last month. Compared to May of last year, sales were up 16.9 percent, indicating some momentum in the new homes market.
Higher mortgage rates and a surge in prices amid a dearth of properties available for sale have weighed on the housing market since the middle of 2013.
But as mortgage rates level off and house price appreciation slows, signs of life are emerging.
A report on Monday showed sales of previously owned homes, the largest segment of the housing market, recorded their largest increase in more than 3-1/2 years in May.
A third report on Tuesday showed the S&P/Case-Shiller composite index of house prices in 20 metropolitan areas rose just 0.2 percent in April, with the year-on-year increase slowing to 10.8 percent. It was the smallest 12-month gain since March of last year and followed a 12.4 percent year-on-year jump in March.
Last month, new home sales increased in all four regions. They hit a six-year high in the Midwest, while sales in the South were the highest since June 2008.
The inventory of new houses on the market was unchanged at 189,000 units. At May's sales pace it would take 4.5 months to clear the supply of houses on the market, the fewest since June 2013. That was down from 5.3 months in April.
Reporting by Lucia Mutikani; Editing by Paul Simao