Sales of new U.S. homes hit a five-month low in February, but a surge in consumer confidence rose to a six-year high in March, suggesting the economy is regaining momentum after being held back by severe weather.
Other data released on Tuesday showed solid gains in prices of U.S. homes, which should boost household wealth and support consumer spending. An unusually frigid winter complete with snowstorms and dampened spirits, disrupted economic activity at the start of the year.
New home sales dropped 3.3 percent to a seasonally adjusted annual rate annual rate of 440,000 units, the lowest level since last September, the Commerce Department said. January U.S. home sales were revised down to a 455,000-unit pace from 468,000-unit rate.
The drop in February brought new home sales in line with other data such as home resales and building activity that have offered a downbeat picture of the housing market.
Some slowing of U.S. homes for sale has been blamed on the harsh winter weather. Bu the sector – the main channel through which the Federal Reserve has sought to stimulate the economy through monthly bond purchases – lost momentum last summer after a run-up in mortgage rate sales.
In a separate report, the Conference Board stated its index of consumer attitudes rose to 82.3, the highest it has been since January 2008, from 78.3 in February.
“Overall, consumers expect the economy to continue improving and believe it may even pick up a little steam in the months ahead,” said Lynn Franco, director of economic indicators at the Conference Board in a statement.
The lack of homes for sale and soaring house prices have also had an implication on housing. But a recovery is expected for later this year as household formations accelerate after abruptly slowing in 2013.
In turn, the lack of houses for sale is also what is keeping prices supported.