U.S. New Home Sales, Consumer Confidence Sky High

By Gretchen Wegrich

U.S. new home sales took flight in January, soaring to the highest number since July 2008, while separate data revealed that U.S. consumer confidence surpassed expectations for improvement in February.  

New home sales rose almost 16 percent in January, according to the Commerce Department. The increase put new home sales at a seasonally adjusted annual rate of 437,000. The 16 percent increase is the largest increase in almost 20 years.

More Americans are buying houses due to record-low mortgage rates and continuing steady job creation. Also contributing to the upswing in new home sales is a supply shortage of previously occupied homes. The number of previously occupied homes for sale is at a 13-year low.

In spite of the improvements, increases are coming from rock-bottom. In 2011, new home sales sank to a record low. Sales are still far below the 700,000 annual mark considered healthy by economists.

U.S. Consumer Confidence Soars

In February, U.S. consumer confidence improved above and beyond what economists predicted as Americans brushed off concerns about fiscal policy and tax increases, concluded a private sector report released Tuesday.

The report, issued by the Conference Board, an industry group, revealed that consumer attitudes rose from its index level of 58.4 in January to 69.6 in February, easily besting economists’ predictions for 61. Consumer confidence reached the highest level since November 2012.

January’s consumer confidence index was the lowest level in more than a year. Consumer sentiment was low due to concerns over Washington’s handling of the ‘fiscasl cliff,’ tax increases and spending cuts. Although the brunt of tax increases and cuts were ultimately averted, the payroll deduction was reinstated, leaving Americans with less spending money.

“Consumer confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.

Other indexed ratings of consumer confidence:

-The expectations index improved from 59.9 to 73.8

-The present situation index rose from 56.2 to 63.3

-The jobs hard to get index rose to 37 percent from 36.6 percent

-The jobs plentiful index rose from 8.5 percent to 10.5 percent

-Expectations for inflation in the next year decreased from 5.7 percent to 5.5 percent

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.