There are few economic indicators more telling than home purchases. When sales are rising, they confirm that consumers have money to spend, they feel secure in their jobs and they’re optimistic about the future.
So what do the latest numbers tell us? They’re mixed, but overall the news is good. On Monday we learned from the Commerce Department that new-home sales fell 1.5 percent in March, to a seasonally adjusted rate of 511,000, but the decline mostly occurred in the Western states. And the Commerce Department revised its February report upward to a pace of 519,000 from the 512,000 that it initially reported.
New-home sales have fallen for the past three months, but Reuters said the figures are volatile on a month-to-month basis because they’re drawn from a small sample and the trend probably does not mean the housing industry is slowing because the labor market continues to improve.
"Through some of the short-lived ups and downs in the data, it still appears that new home sales are trending higher over time," Daniel Silver, an economist at JPMorgan in New York, told the news service.
Last week’s report on sales of existing homes in March was much brighter, and analysts were ebullient.
"There cannot be too much wrong with the economy if consumers keep buying new homes. It shows confidence, "Chris Rupkey, chief economist at MUFG Union Bank in New York, told Reuters after the National Association of Realtors said home resales climbed 5.1 percent, to an annual rate of 5.33 million units.
Sales were higher in all four regions of the country. Mortgage rates remain low and the stock market continues to make gains, factors that should keep consumer confidence up.
Potential buyers’ stock portfolios appear to be in good shape. Two of the three major U.S. market indexes closed higher last week, with the Dow Jones industrial average gaining 0.6 percent and the S&P 500 index rising 0.5 percent. The Nasdaq composite index slipped 0.7 percent for the week. On Monday the markets were modestly lower ahead of this week’s meeting of the Federal Reserve’s rate-setting Federal Open Market Committee.
A busy week for economic news will continue today when we see the Conference Board’s Consumer Confidence Index for April. Economists’ consensus forecast is that it held steady or slightly increased from the solid March reading of 96.2 that represented a rebound from a weak February. On Friday the University of Michigan will release its final Consumer Sentiment Index for April. It is likewise forecast to be slightly higher, at 90.0, than the mid-month reading of 89.7.
Today we also will get the March report on orders for durable goods, such as autos and household appliances. Economists expect a rebound from a 3 percent decline in February to a 2.4 percent gain in March.
The Federal Reserve’s April meeting starts today; economists expect the central bank to continue to keep interest rates steady. The meeting ends Wednesday, a day ahead of the release of first-quarter gross domestic product. The forecast is for slim growth of 0.7 percent that would follow a 1.4 percent gain in the fourth quarter last year.
On Friday we will find out whether consumers were buying more than houses at in March with the release of reports on personal income and consumer spending.
The consensus forecast is that personal income rose 0.4 percent and consumer spending gained 0.2 percent. Core inflation is expected to be flat, a welcome result for consumers, if it works out that way — and for those of us who sell to them — in the early spring, when people are often not only motivated to get out and spend, but also to spend for themselves.