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Consumer confidence fell to a 25-year low, according to the Reuters/University of Michigan consumer sentiment index, dropping from 69.5 in March to 62.6 in April. The reading is troubling because it’s regarded as an indicator of future consumer spending, which accounts for about 70% of U.S. economic activity.
Sales of existing homes dropped 2% in March to an annual rate of 4.93 million units, the National Association of REALTORS® reported April 22. The median price of an existing home tumbled 7.7% from a year ago to $200,700, the second biggest decline since a record 8.4% drop in February.
Sales of new homes plunged 8.5% in March to an annual rate of 526,000 units, the slowest sales pace since October 1991, the Commerce Department said April 24. The median price of a new home dropped 13.3% from a year ago to $227,600, the biggest year-over-year price decline since a 14.6% plunge 38 years ago. At the current sales pace, it would take 11 months to deplete the national inventory of new homes.
Homebuyers didn’t get much mortgage rate relief as 30-year and 15-year fixed-rate loans edged up for the week ending April 24, Freddie Mac said in its weekly survey of mortgage lenders.
The demand for durable goods — big-ticket items expected to last three or more years — dipped 0.3% in March, a worse-than-expected showing, the Commerce Department said April 24. The last time orders fell for three consecutive months was from February to April of 2001, when the nation was sliding into the last recession.
The job front was a bit rosier, however, as new claims for unemployment benefits fell by 33,000 last week to 342,000, the Labor Department reported April 24. Economists had expected a rise of 3,000.
Economic news due this week includes another consumer confidence report on April 29 and a preliminary report on the nation’s first-quarter gross domestic product on April 30.
Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.

Sales of existing homes unexpectedly rose 2.9% in February, the first increase in seven months, the National Association of REALTORS® said March 24. “The improvement is another sign that the market is stabilizing,” said NAR chief economist Lawrence Yun. The median existing-home sales price in February was $195,900, down 8.2% from a year earlier.
February sales of new single-family homes fell 1.8% to a 13-year low, the Commerce Department said March 26. The decline was slightly worse than expected. The median new-home sales price in February was $244,100, down 2.7% from the level of a year ago.
Orders for durable goods — items expected to last three or more years — fell 1.7% in February, worse than the 1% increase economists had predicted, the Commerce Department reported March 26. Demand for manufacturing equipment plunged 13.3%, the largest amount on record.
On March 27, the Commerce Department confirmed data showing that the nation’s gross domestic product (GDP), which measures the value of all goods and services produced in the United States, crawled home at a 0.6% annual rate for the 2007 October-to-December quarter. In the prior quarter, GDP sizzled at 4.9%.
Consumer spending, which accounts for two-thirds of the U.S. economy, edged up just 0.1% in February, the weakest spending performance in 17 months, the Commerce Department said March 28. The modest gain was in line with forecasts.
For the week ending March 27, interest rates on 30-year fixed-rate mortgages nudged downward, according to Freddie Mac’s Primary Mortgage Market Survey®.
For the week ending March 21, mortgage applications shot up 48.1%, the Mortgage Bankers Association said. Refinances surged 82.2% while purchase business improved 10.6%.
Economic news due out this week includes the highly anticipated unemployment report on April 4.

by Kera Beltram
The U.S. consumer price index rose 0.4% in January, higher than analysts’ expected 0.3% gain, the Commerce Department said February 20. The core index, which excludes food and energy costs, increased 0.3%, more than economists’ expected hike of 0.2%.
On the same day, the Federal Reserve released the minutes of its Jan 29-30 closed door meeting. At that session, the Fed lowered its growth forecast for the year from a range of 1.8% to 2.5% to a range of 1.3% to 2%, citing “further intensification of the housing correction, tighter credit conditions … ongoing turmoil in financial markets and higher oil prices.”
The Conference Board said on February 21 that its index of leading economic indicators — an important gauge of future economic activity over the next three to six months — fell 0.1% in January. With the decline, the leading index has fallen 2% over the last six months, the biggest decline since early 2001.
Meanwhile, the Federal Reserve Bank of Philadelphia, one of the 12 regional Fed banks, said on February 21 that its index measuring factory output contracted to minus 24.0, well below analysts’ forecast of minus 11.0. It was the weakest reading since the 2001 recession. Housing starts picked up 0.8% in January from December, the Commerce Department said February 20. However, building permits — an indication of future construction — fell 3%. Both reports were in line with expectations.
For the week, interest rates on long-term fixed mortgages rose, Freddie Mac reported February 21. Against this rising-rate environment, mortgage application volume tumbled 22.6% during the week ending February 15, according to the Mortgage Bankers Association. Refinance applications accounted for 61.7% of total applications.
This week look for an update on existing home sales on February 25 and the producer price index on February 26.
Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.

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