US consumer confidence, home sales drop amid virus surge

United States consumer confidence sank in December amid a resurgence of COVID-19, while home sales in November dropped for the first time in 6 months, according to private data released on Tuesday, December 22.

The data underscored the faltering economic recovery as the coronavirus death toll spiked over 300,000, which prompted US lawmakers to overcome partisan squabbling and approve a $900-billion pandemic relief package late Monday, December 21.

The Conference Board’s consumer confidence index fell to 88.6 from 92.9 last month, the second consecutive drop, driven by a sharp slide in Americans’ feelings about the present situation.

“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence,” The Conference Board’s Lynn Franco said in a statement. 

“As a result, consumers’ vacation intentions, which had notably improved in October, have retreated…and consumers do not foresee the economy gaining any significant momentum in early 2021,” Franco said.

The housing market has been a bright spot in the world’s largest economy spurred by historically low mortgage lending rates, but as COVID-19 infections began to spike in the fall, sales dropped off.

Existing home sales fell 2.5% in November compared to the prior month, snapping a streak of 5 months of increases, the National Association of Realtors said.

While the low inventory of homes for sale, which has pushed up prices, is largely blamed for the slower sales, NAR chief economist Lawrence Yun acknowledged the pandemic impact on weakening consumer confidence.

“Given the COVID-19 pandemic, it’s amazing that the housing sector is outperforming expectations,” Yun said in a statement, noting that sales are 25.8% higher than November 2019.

“Circumstances are far from being back to the pre-pandemic normal,” he said. “However, the latest stimulus package and with the vaccine distribution underway, and a very strong demand for homeownership still prevalent, robust growth is forthcoming for 2021.”

And the Conference Board survey, conducted before a new stimulus deal seemed assured but after US regulators approved the first coronavirus vaccine, showed a slight increase in sentiment about the outlook 6 months in the future. – Rappler.com