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Times wire servicesAs the housing market stays strong, consumers see a light in the second half of the year.
U.S. consumer confidence rose in May to its highest level in six months, aided by cheaper energy and a rising stock market.
The Conference Board's consumer confidence index rose to 83.8 from 81 in April, the second monthly increase in a row. An index in the report that measures consumers' attitudes about conditions six months from now rose to 94.4, the highest since September, from 84.8 in April.
Consumer confidence among Floridians also rose in May, to 91 from 88 in April, according to the University of Florida's Bureau of Economic and Business Research.
Rising optimism and the lowest mortgage rates on record are helping power sales of new and previously owned homes, separate reports showed. Cheaper borrowing costs may also lead to more refinancing, boosting the economy as homeowners use the extra money to spend, economists said. Investors pushed up stocks and pushed down the prices of benchmark Treasuries after the reports.
"Refinancing and lower (gasoline) prices are working like a tax cut, giving consumers the wherewithal to spend," said Chris Rupkey, senior economist at Bank of Tokyo-Mitsubi-shi Ltd. "It's also helpful in building confidence, and all of these factors improve the outlook for consumer spending in the future."
U.S. new home sales unexpectedly rose 1.7 percent in April to 1.028-million at an annual rate, the fastest pace this year, the Commerce Department said. April's sales of previously owned houses rose 5.6 percent to 5.84-million at an annual rate from 5.53-million in March, the National Association of Realtors said.
Compared with the same month a year earlier, sales of existing homes nationally rose 3.4 percent in April. In Florida, existing-home sales jumped 5 percent last month to 17,062 units, compared with 16,270 in April 2002.
Statewide, the median cost of a resale home in Florida rose 11 percent to $151,900, up from $136,700 in April 2002. The median price means half the homes sold for more, half sold for less. That represented a 55.1 percent increase from 1998, when the statewide median sales price was $97,900, according to the Florida Association of Realtors.
In the Tampa Bay area, 3,206 homes changed hands last month, a 10 percent increase over the 2,904 homes sold in April 2002. The market's median home price rose 8 percent to $132,900 from $122,600 a year earlier.
The Standard & Poor's 500 Stock Index rose 18.26 points, or 2 percent, Tuesday to 951.48, its highest close since August. The Dow Jones Industrial Average gained 180 points, or 2.1 percent. The benchmark Treasury note due in May 2013 fell about seven-eighths of a point, pushing its yield up 10 basis points to 3.43 percent.
Stocks with Tampa Bay area connections rose, led by USA Interactive, parent of St. Petersburg's Home Shopping Network, and Jabil Circuit. USA Interactive was up $1.29 to $37.10 and Jabil rose $1.19 to $20.79.
The confidence index, which is almost 27 points below a high in March last year, has been restrained by rising joblessness. More than a half-million jobs were lost in the last three months and the unemployment rate in April matched an eight-year high of 6 percent. Labor market concerns pushed down the Conference Board's present situations index to 67.9 from April's 75.2.
"People are very nervous about what is happening right now, but they have nice rose-colored glasses six months from now," said Delos Smith, an economist at the Conference Board.
The percentage of people suggesting that business conditions will improve six months from now rose to 22.8 percent from 18.9 percent, while the number expecting that jobs will become more plentiful increased to 17.8 percent from 16.4 percent.
Consumers' assessment of the current job market darkened. The percentage of consumers who saw jobs as plentiful fell to 12.6 percent from 13 percent. The percentage that saw jobs as hard to get rose to 32.6 percent from 29.4 percent.
"The share of people reporting that jobs are hard to get rose to the highest level in nine years," said Douglas Porter, senior economist with BMO Nesbitt Burns Securities. "But consumers still remain relatively confident that the economy is poised to turn around."
Economists also expect the outlook to improve later this year. A survey by the National Association for Business Economics, the nation's largest association of business economists, predicted the U.S. economy will expand at a 3.6 percent pace in the second half, leading to more business investment and lower unemployment.
In the next six months, 7.6 percent of Americans said they plan to buy new cars, up from 6 percent last month, and 3.6 percent said they planned to buy a new home, up from 3.4 percent.
- Times staff writer Steve Huettel contributed to this report. Information from Bloomberg News Service and the Associated Press was used in this report.