May 27 (Bloomberg) -- Confidence among American consumers fell in May to the lowest level since 1992 as the two-year housing slump showed no sign of bottoming.
The Conference Board's confidence index declined more than forecast to 57.2, the New York-based research group said today. The S&P/Case-Shiller home-price index dropped 14.4 percent in March from a year earlier, the most since the figures were first published in 2001. Separate figures from the Commerce Department showed sales of new homes were the second-lowest since 1991 in April.
The slide in home values, along with gasoline near $4 a gallon and rising unemployment, threatens to hobble the consumer spending that accounts for more than two-thirds of the economy.
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``When confidence is as bad as it is on the consumer side, it's hard to believe we're going to be buying a lot of homes in the near term,'' said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis, Minnesota. ``The drag from home-price declines, the credit crunch and oil prices will probably be more severe than some had forecast earlier in the year.''
Stocks initially rallied after the government's report on new home sales exceeded economists' forecasts, and then surrendered some of the gains later. The Standard & Poor's 500 homebuilder index was up 0.3 percent at 346.9 at 12:28 p.m. in New York. Ten-year Treasury note yields rose to 3.89 percent from 3.84 percent at last week's close.
Economists forecast the Conference Board's measure would fall to 60, according to the median of 68 forecasts in a Bloomberg News survey, from a previously reported 62.3. Estimates ranged from 57 to 63.
Waning Optimism
The Conference Board's index of present conditions dropped to 74.4 in May from 81.9 in April. A gauge of expectations for the next six months declined to 45.7 from 50.0 the prior month, the report showed. The projected inflation rate a year from now soared to a record 7.7 percent, the survey showed.
``Until you start to see some declines in energy prices and labor markets come back, these numbers are going to look pretty soggy,'' Jay Bryson, global economist at Wachovia Corp. in Charlotte, North Carolina, said in a Bloomberg Television interview.
Sales of new homes increased 3.3 percent in April after readings for the prior month were revised lower, the Commerce Department's report showed. The April sales pace was an annual 526,000 homes, compared with a 509,000 rate in March that was the lowest in 17 years.
Economists forecast new home sales would drop to a 520,000 annual pace from an originally reported 526,000 rate the month earlier, according to the median estimate.
Inventories Drop
One bright spot is that inventories decreased. The supply of homes at the current sales rate dropped to 10.6 months' worth from 11.1 months in March. The number of homes completed and waiting to be sold decreased to 181,000, the fewest since July.
The median sales price last month increased 1.5 percent from April 2007 to $246,100. The figures can be influenced by changes in the mix of sales at the regional level. For that reason, economists prefer price measures that track the same house over time, such as the S&P/Case-Shiller index.
Property values may drop more than 30 percent from their peak in 2006, Robert Shiller, an economics professor at Yale University and co-creator of a housing-price index, said in an interview with the London-based Times last month.
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