Consumer confidence falls

NEW YORK (Reuters) - U.S. consumer confidence slipped in April to its lowest since last August, while sales of existing homes in March dropped more sharply than in any month since January 1989, according to reports on Tuesday that offered more evidence of a weakening economy.

The Conference Board said its index of consumer sentiment fell to 104.0 from an upwardly revised 108.2 in March.

Separately, the National Association of Realtors said March existing home sales fell 8.4 percent to a 6.12 million-unit annual rate. Existing home sales comprise 85 percent of the U.S. housing market.

Treasury bond prices rallied soon after the reports were released, while the dollar slipped and U.S. stock indexes were mixed.

"The data suggest that the economy may still be weakening, while at the same time the worst news on U.S. inflation is still to come. So the Federal Reserve is caught in the middle," said Subodh Kumar, chief investment strategist with Subodh Kumar & Associates in Toronto, Canada.

Signs that wage inflation and consumers' inflation expectations are on the rise could deter the U.S. central bank from cutting its 5.25 percent federal funds target rate for many months, even in the face of a softening economy, some economists expect.

"Rising prices at the gas pump continue to play a key role in dampening consumers' short-term expectations. The decline in the Present Situation Index -- the first decline in six months -- warrants monitoring in the months ahead, as further declines would suggest a softening in growth," Lynn Franco, director of The Conference Board Consumer Research Center, said in a press release.

Housing has been the cornerstone of U.S. economic growth over the past few years. The sector's decline is a central focus for analysts trying to gauge how sharply the U.S. economy may slow.

March brought the eighth consecutive drop in existing home prices, with the national median price down 0.3 percent from a year ago to $217,000. Analysts saw the data as a sign that the weakness in the housing sector is not yet over.

The inventory of homes for sale fell 1.6 percent last month to 3.745 million units. But the anemic sales pace pushed the supply of homes to 7.3 months' worth -- the highest since last October's 7.4 months' supply. Inventories are decreasing, but sales are decreasing at faster rate, which means it will take longer to get rid of the inventory.

Data on March new home sales is scheduled for release on Wednesday.

INFLATION WORRIES GROW

Consumers' inflation expectations in the Conference Board survey rose to their highest since August.

The median forecast of economists polled by Reuters was for the confidence index to come in at 105.0, down from an originally reported 107.2 in March.

Consumers' assessment of current conditions slipped too. The business research group's present situation index fell to 131.3 in April from 138.5 in March, the first fall in six months. The expectations index declined to 85.8 from 87.9.

Inflation expectations rose to the highest since August: Consumers' expectations for the inflation rate 12 months from now rose to 5.2 percent from 4.9 percent in March.

Views of labor market conditions slipped a little in the survey. Consumers who said jobs were "plentiful" slipped to 27.8 percent from 30.3 percent, while those who said jobs were "hard to get" edged up to 20.4 percent from 18.9 percent.