
Economic indicators are released every week to provide insight into the overall health and performance of an economy. They serve as essential tools for policymakers, advisors, investors, and businesses because they allow them to make informed decisions regarding business strategies and financial markets. In the week ending May 23, the SPDR S&P 500 ETF Trust (SPY ) fell 0.52%, while the Invesco S&P 500 Equal Weight ETF (RSP ) was down 1.75%.
This article examines three indicators from last week — existing home sales, new home sales, and consumer sentiment. These data points provide an update on the current state of the housing market as well as consumer attitudes about the current and future strength of the economy.
The housing indicators discussed in this article could impact home builders and residential real estate ETFs such as Invesco Dynamic Building & Construction ETF (PKB ), iShares U.S. Home Construction ETF (ITB ), SPDR S&P Homebuilders ETF (XHB ), and iShares Residential and Multisector Real Estate ETF (REZ ).
Existing Home Sales
Existing home sales fell for a second straight month in April as elevated mortgage rates and increased home prices continue to weaken demand. In April, existing home sales fell 1.9% to a seasonally adjusted annual rate of 4.14 million units. The latest figure was lower than expected, with sales falling short of the projected 4.21 million units. Over the past few years, existing home sales have steadily dropped, with 21 of the past 27 months experiencing declines.
Potential homebuyers continue to face competition in the housing market as they grapple with tight inventory. As a result of strong demand, multiple offers on a home are leading to subsequent price hikes. The median price for an existing home sold last month was $407,600, an all-time high for the month of April. This represents a 5.7% increase compared to one year ago, marking the 10th consecutive month of year-over-year increases for existing homes.

New Home Sales
Another housing indicator fell short of expectations this week, as new home sales were weaker than anticipated. New home sales in retreated 4.7% in April to a seasonally adjusted annual rate of 634,000 units, falling short of the expected 677,000 units. April’s sales are 7.7% below what they were a year ago, marking the first annual decline in over a year.
With mortgage rates still elevated and low inventory available for existing homes, homebuyers have needed to shift their attention toward new construction. However, mortgage rates are now deterring potential homebuyers from the new home market as well. New home sales can be highly volatile from month to month, so looking at a six-month moving average (six-month MA) can help one better understand the overall trajectory of the series. In April, the six-month MA reached its lowest level in a year, highlighting the overall weakness in the housing market.

Consumer Sentiment
Consumer sentiment fell to its lowest level in six months, according to this month’s final report for the Michigan Consumer Sentiment Index. The May final report came in at 69.1, marking a 10.5% decrease from April’s final reading and just above the forecasted value of 67.4. The latest reading comes on the heels of three consecutive months of little change to consumers’ attitudes.
The Michigan Consumer Sentiment Index is a monthly survey measuring consumers’ opinions with regard to the economy, personal finances, business conditions, and buying conditions. A closer look at May’s report revealed that consumers are concerned over the labor market, high interest rates, income growth, and inflation.
Consumer attitudes are closely monitored, as their confidence levels tend to impact their spending behavior. Given that consumer spending accounts for approximately 70% of the economy, consumer spending has a major impact on economic growth.
The Consumer Discretionary Select Sector SPDR ETF (XLY ) is tied to consumer confidence.

Economic Indicators and the Week Ahead
The upcoming week will deliver some of the market’s most closely watched data that provides insight into economic growth, consumption, and consumer attitudes.
On Tuesday, the Conference Board will report the May reading for their Consumer Confidence Index. Consumer confidence, which could impact the Consumer Discretionary Select Sector SPDR ETF (XLY ), dropped to its lowest level since July 2022 last month, as future concerns around business conditions, job availability, and income remain persistent
On Thursday, the Bureau of Economic Analysis (BEA) will release the second estimate of Q1 GDP. As a reminder, last month, the initial estimate came in lower than expected, at 1.6%.
On Friday, the BEA will publish April’s PCE price index data, the Fed’s preferred measure of inflation. Headline and core PCE have slowly trended downward toward the Fed’s 2% target rate over the past few years but have stagnated over recent months, with the latest readings at 2.7% and 2.8%, respectively.
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