New York, NY, Feb. 26--Consumer confidence fell in February to its lowest level in nearly ten years. The Conference Board’s Consumer Confidence Index fell almost 15 points to 64.0, its lowest reading since October 1993, from 78.8 in January. Analysts were predicting a reading of 77.0.
“On all fronts, it's jitters about the upcoming war with Iraq,” said Josh Feinman, chief economist for Deutsche Asset Management in New York.
“The gloom is deepening,” said economist Oscar Gonzalez of John Hancock Financial Services in Boston. “A stagnant job market, rising oil prices, slumping stock prices and the threat of war with Iraq, all of these seem to be pressing down heavily on consumers.”
Still, Americans continued to purchase homes last month, as the housing market remained one of the few bright spots in the economy.
Sales of previously owned homes surged in January to their best month ever, at a seasonally adjusted annual rate of 6.09 million, according to the National Association of Realtors. That represented a 3% increase from December and defied analysts' expectations that home sales would dip slightly to a rate of 5.80 million.
“It's mortgage rates,” said David Lereah, the association's chief economist. He said low mortgage rates continue to be “the fuel for the housing engine.”
The average fixed rate 30 year mortgage dropped to 5.92% in January, the lowest level since the early 1960s. The average in December was 6.05%.
Low mortgage rates pushed sales of both new and existing homes to record levels last year. And, last week, the government reported that construction of new homes and apartments posted a 16 year high in January.
The national median home price in January was $160,400, up 6.7% from the same month a year ago.
With the U.S. moving closer to war, the Consumer Confidence Index was down for the third straight month in February, as those surveyed expressed more worries about the job outlook and their incomes.
The Present Situation Index, which gauges consumers' sentiment about current business conditions, dropped to 61.6 in February from 75.3 in January. The latest time the index fell to such lows was in November 1993, when it slumped to 59.2.
The Expectations Index, intended to measure feelings about the next six months, fell more than 15.5 points to 65.6, hitting an 11 year low. It stood at 81.1 only a month ago.
