Consumer Mood, Home Sales Reflect Expansion

U.S. and California home resales continued their strong pace in April and consumer confidence rose for a seventh straight month in May, indicating that the economy’s record peacetime expansion isn’t losing momentum, reports released Tuesday show.

“All the economic indicators are still strong,” said Fred Flick, vice president of research for the National Assn. of Realtors. “Consumers are carrying this economy.”

In California, sales of existing single-family homes rose 7.4% in April compared with a year ago, with the median home price increasing 9.5% in the same period, the California Assn. of Realtors said.

Last month, the statewide median home price rose to a new high of $217,090. That figure surpasses the previous statewide high of $212,330, set in March.

Sales of existing detached homes in California reached a seasonally adjusted annualized rate of 654,730 in April, according to information gathered by the California association from 90 Multiple Listing Services statewide. The annualized figure measures how many houses would be sold by year’s end if sales were to continue at the April rate. Sales of condominiums and new homes are not included.

In Los Angeles County, sales activity increased 1% over April 1998, and the median home price rose by 7.5%. In Orange County, sales fell 13.4%, with the median climbing 9.2%. Ventura County saw sales drop 10.3%, but the median price went up 13.3%. Combined data for Riverside and San Bernardino counties show sales slipping 5.9% as the median price climbed 7.4%.

Nationwide, existing-home sales ran at an annualized rate of 5.24 million last month, the National Assn. of Realtors said. Although that’s 3.3% less than March’s record rate of 5.42 million, it tops analysts’ forecasts of a 4.99-million pace for April. A month ago, the realty group estimated that March’s sales rate had been 5.05 million.

Higher mortgage rates aren’t doing much to slow demand, the national association said. It expects home resales for the year to top 5 million, which would exceed last year’s 4.97 million and make 1999 the fourth straight record year for that industry.

One reason for the optimism: Consumer confidence rose this month to 135.8 from a revised 135.5 in April, according to the New York-based Conference Board, a private business group. That’s close to a 30-year high of 138.2 set last June.

Consumers participating in the survey said they are more likely to buy cars and trucks as well as washing machines, TVs, carpets and air conditioners.

Business confidence is rising too. Surveys reported Tuesday by the National Assn. of Purchasing Management showed 55% of manufacturers and 54% of companies outside of manufacturing expect their business to improve over that latter half of this year.

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Existing-Home Sales

Seasonally adjusted annual rate, in millions of units:

May: 5.2 million

Source: National Assn. of Realtors

Consumer Confidence

From a monthly survey of 5,000 U.S. households.

Index: 1985=100.

May: 135.8

Source: Conference Board