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U.S. consumer confidence ticks down, home sales fell in May

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss data from the University of Michigan Consumer Sentiment Report.

Video Transcript

JULIE HYMAN: Now we've got some breaking economic news. The final reading on the University of Michigan's Consumer Confidence Index coming in at 50.0. That is revised down 2/10 of a percentage point. So 50.0 is where that sentiment survey now lands. That is right on the dividing line between improvement and deterioration in sentiment here.

Current conditions of 53.8-- that's also a downward revision. And expectations at 47 and 1/2, and the outlook on the part of consumers for inflation from one year from now is 5.3%. From five to 10 years from now, is 3.1%. So again, this was really a pivotal report. When the preliminary figures came out, it was, in addition to that CPI report, really the thing that seemed to push the Federal Reserve over the edge when it came to convincing it of a 75 basis point increase. So 50 is where we stand with the University of Michigan sentiment.

We also, by the way, got new home sales. And that number, I guess, is worse or better than expected, depending on how you look at it. Let me explain. The annual pace for new home sales in the month of May, 696,000, which is better than estimated on an absolute basis. However, because of an upward revision the prior month to 629,000, you get a month over month drop, if that makes sense. So-- or a gain, excuse me. I'm reading numbers wrong. Woo, it's been a long short week, folks.

OK, gain in 10.7% month over month in new home sales to an annual pace of 696,000. Excuse me. So this number is considerably better than expected, just to be clear. Better than expected new home sales, University of Michigan sentiment being revised downward and worse than expected.

BRAD SMITH: It kind of comes back and, at least, reminds me of the home data that we've seen come through over the course of the past two weeks. Lennar last week, and then, earlier this week as well, we were talking about KB Homes and what they were seeing as well.

JULIE HYMAN: Right, so a little bit of a disconnect between the new and existing.

BRAD SMITH: Right, exactly, and especially when you pair that with the existing on the Redfin data side, they're seeing less bids coming in per available listing right now, too.