New home sales rebound in US but consumer sentiment ebbs

Consumer sentiment index fell in January after rising in the aftermath of Trump’s victory

A vendor at her roadside stall in New York: data on Friday showed a dip in consumer sentiment in February

A vendor at her roadside stall in New York: data on Friday showed a dip in consumer sentiment in February

 

New US single-family home sales rose less than expected in January, likely hurt by flooding in California, but continued to point to a strengthening housing market despite higher prices and mortgage rates.

Other data on Friday showed a dip in consumer sentiment this month, though it remained at a level consistent with a healthy pace of consumer spending.

The Commerce Department said new home sales increased 3.7 per cent to a seasonally adjusted annual rate of 555,000 units last month. Economists had forecast single-family home sales, which account for about 9 per cent of overall home sales, surging 6.3 per cent to a 570,000-unit rate last month.

New home sales, which are derived from building permits, are volatile on a month-to-month basis and subject to large revisions. Sales were up 5.5 per cent compared to January 2016.

Data this week showed sales of previously owned homes jumped 3.3 per cent in January to a 10-year high. House prices increased 6.2 percent in December from a year ago.

In a separate report on Friday, the University of Michigan said its consumer sentiment index fell to a reading of 96.3 this month from 98.5 in January. The index had surged in the prior three months following Donald Trump’s victory in the November 8th presidential election.

“Normally, the implication would be that consumers expected Trump’s election to have a positive economic impact,” the University of Michigan said. “That is not the case since the gain represents the result of an unprecedented partisan divergence, with Democrats expecting recession and Republicans expecting robust growth.”

The University of Michigan said February’s consumer sentiment reading suggested a 2.7 per cent annualised growth pace in consumer spending this year.

Prices of US government debt edged up after the data. US stocks were trading lower as was the dollar against a basket of currencies.

- Reuters