Consumer Confidence Slides

Overview: While investors were on the lookout for new developments in the Middle East or on tariffs, there was little market-moving news in these areas over the past week. The economic data revealed a much weaker than expected reading for consumer confidence, which was positive for mortgage markets, and rates ended the week a little lower.

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The monthly report on consumer confidence published by the Conference Board unexpectedly declined this month, as consumers remained nervous about the impact of tariffs. The most recent reading showed a sharp drop to 93, far below the consensus forecast of 99, with decreased confidence across nearly every age and income group. The share of respondents who said that jobs were plentiful fell to the lowest level since March 2021. Consumers also were hesitant to purchase big-ticket items such as cars and appliances.

In May, sales of existing homes, which account for roughly 85% of the total market, increased 1% from April, exceeding the consensus forecast. Sales were at the slowest pace for May since 2009. The median existing-home price of $422,800 was up 1% from last year at this time at a record high for the month of May. Inventory levels remain low, standing at just a 4.6-month supply nationally, well below the 6-month supply that is typical in a balanced market. The trend is positive, however, as inventories were over 20% higher than a year ago.

The results were much worse for the segment containing newly constructed homes. In May, new-home sales, which account for the remaining 15% of the market, dropped 14% from April, far below the consensus forecast. The median new-home price of $426,600 was up 3% from a year ago. While existing-home sales measure actual closings during the month, new-home sales are based on contracts signed, making them a leading indicator of future housing market activity. 

On the surface, the latest home building data was somewhat disappointing, as overall housing starts in May fell 10% from April to the lowest level in five years. However, the decline was entirely due to volatile multi-family units, which dropped 30%, while single-family starts rose slightly. Single-family building permits, a leading indicator of future construction, declined 3% from April. A separate survey of home builder sentiment on housing market conditions from the National Association of Home Builders (NAHB) unexpectedly dropped to the lowest level since 2022.

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Existing-Home Sales (millions)

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Week Ahead

June 27

Personal Income and Outlays

Personal Consumption Expenditures (PCE) Price Index

July 1

Institute for Supply Management (ISM) Manufacturing Index

July 3

ISM Services Index

Employment Report