WASHINGTON (Reuters) – U.S consumer confidence fell in September and home sales dropped to an eight-month low in August due to the impact of Hurricanes Harvey and Irma, supporting the view that the storms would hurt economic growth in the third quarter.
The economy, however, remains on solid ground as other data on Tuesday showed a strong increase in house prices in July.
The Conference Board said its consumer confidence index declined to a reading of 119.8 this month from 120.4 in August, which was the highest reading in five months. It said confidence in Texas and Florida “decreased considerably.”
The survey showed consumers’ views of the labor market were less upbeat. The share of consumers saying jobs are “plentiful” fell to 32.6 percent from 34.4 percent in August.
However, the proportion of those stating jobs are “hard to get” slipped to 18.1 percent from 18.4 percent. The number of consumers expecting an improvement in their incomes rose marginally to 20.5 percent this month from 19.9 percent in August. The share expecting a drop in income was unchanged at 8.3 percent.
Despite being near full employment, the labor market has struggled to generate strong wage growth, frustrating both consumers and policymakers. But rising home prices should continue to underpin consumer spending, even though the housing market is slowing.
A second report on Tuesday showed the S&P CoreLogic Case-Shiller composite index of house prices in 20 metropolitan areas rose 5.8 percent in July on a year-over-year basis after increasing 5.6 percent in June.
An acute shortage of homes on the market and strong demand are pushing up house prices. While rising house prices are boosting equity for homeowners, tight inventories are hurting home sales.
The U.S. dollar .DXY rose to its highest level since Aug. 31 against a basket of currencies after the data. U.S. stocks were trading higher while prices of U.S. Treasuries fell.
HOUSING SLOWING In a third report, the Commerce Department said new home sales decreased 3.4 percent to a seasonally adjusted annual rate of 560,000 units last month, which was the lowest level since December 2016.
Economists polled by Reuters had forecast new home sales, which account for 9.5 percent of overall home sales, rising 3.3 percent to a pace of 588,000 units last month.
New home sales, which are drawn from permits, are volatile on a month-to-month basis. Sales were down 1.2 percent on a year-on-year basis in August. The…