U.S. home prices, consumer confidence fall sharply
NEW YORK (Reuters) - U.S. consumer confidence fell more sharply than expected in September while the pace of existing home sales slowed in August, according to reports on Tuesday, supporting the view the Federal Reserve would soon cut benchmark interest rates again.
Consumer confidence fell to its lowest in nearly two years on growing concerns about jobs and financial market turmoil, the Conference Board said.
"Weaker business conditions combined with a less favorable job market continue to cast a cloud over consumers and heighten their sense of uncertainty and concern," said Lynn Franco, director of the Conference Board's research center.
A separate report from the National Association of Realtors said U.S. existing home sales, including condominiums, fell a sharp 4.3 percent in August to a 5.5 million-unit annual rate, the slowest since August 2002.
Inventories of single-family homes and condos rose 0.4 percent to 4.58 million units, a 10-month supply and the highest since records began in 1999.
"It's the supply that's the real shocker," said Josh Stiles, senior bond strategist at IDEAglobal in New York. "That is just going to be a weight on prices and activity."
In a note to clients, Goldman Sachs Group Inc. said the decline in home sales represented "the leading edge of housing data that reflects the credit crunch and almost certainly indicates more weakness to come."
Economists polled by Reuters had expected home resales to fall to a 5.49 million-unit pace from the 5.75 million-unit rate in July.
Weak home sales and a sluggish job market weighed on the Conference Board's index of consumer sentiment, which fell to 99.8 in September, the lowest since November 2005 and down from 105.6 in August. The median forecast of economists polled by Reuters was for a slip to 104.0.
August's figure was revised upward from 105.0.
U.S. stocks slipped slightly on the housing and consumer data though they closed mixed on Tuesday. Bonds remained higher on the news, though some gains were lost in late trade. The dollar reached a fresh low against the euro on prospects of another U.S. rate cut.
Short-term interest rate futures, which measure market expectations for Fed monetary policy, rose strongly after the data. The market showed implied chances that the Fed would cut rates by one-quarter point at its next policy meeting on October 30-31 reached 96 percent, the highest in a week, before slipping to 88 percent, still up from 72 percent overnight.
The Fed slashed its overnight federal funds target rate to 4.75 percent from 5.25 percent a week ago, on September 18.
JULY HOME PRICES
A third report showed prices of existing U.S. single-family homes extended declines in July and the annual decline in 10 large cities was the sharpest in 16 years. Continued...
