WASHINGTON - Sales of new homes soared last month, and consumer confidence in the economy stayed close to a record high, government and private data showed.
New-home sales jumped a larger-than-expected 14.7%, to an annual rate of 944,000, after dropping 7.1% in June, the Commerce Department said Monday. The increase was the biggest since April 1993.
"People still perceive this to be a good time to buy a house," said Richard DeKaser, chief economist at National City Corp. in Cleveland. "Clearly, people still believe the economy is in good shape and that their prospects are in good shape."
The Conference Board, a New York research group, Tuesday reported its August index of consumer confidence was 141.1. Though that is lower than July's 143, it is also the sixth time since December that the index has been above 140. Before then the last time it was above 140 was October 1968.
The index reached a record 144.7 in January, which was matched in May.
"The fact we have more to spend means we use it up," said Todd Hornquist, a 32-year-old electrical engineer from Chicago on a shopping spree in San Francisco this week. He and his wife, Stephanie, a 32-year-old church office manager, said they will spend 10% to 15% more this year than last year. Stephanie got a promotion and a raise, boosting their income about 7%.
Personal spending rose last month at a faster rate than in June and at twice the rate of income growth, the Commerce Department reported Monday.
"Consumers haven't noticed that the economy is supposed to be slowing," said Suzanne Rizzo, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.
Yields on the Treasury's 10-year note have fallen almost three-quarters of a percentage point since May amid expectations of a slowdown this year.
Federal Reserve policymakers have raised the overnight bank lending rate six times since June 1999 to keep the economy from overheating and prevent inflation from accelerating. However, the central bank, citing evidence of slower growth, has held rates steady since May.
Consumers show no sign they expect the economy to slow much in the next six months, the Conference Board's report showed. The percentage of survey participants who said they planned to buy cars, appliances, and homes rose this month.