Consumer confidence up; home prices down

WASHINGTON -- An index of consumer confidence in the United States jumped more than forecast in May, signaling consumers will continue to spend in the face of record gasoline prices and a slumping housing market.

The New York-based Conference Board's index of consumer confidence rose to 108 this month from a revised 106.3 in April, a five-month low. The index averaged 105.9 last year.

Stocks advanced and Treasury yields were higher after the report. The index was forecast to rise to 105, according to the median estimate in the Bloomberg survey of 65 economists, from an originally reported 104. Forecasts ranged from 100 to 107.

Consumer sentiment is defying forecasts that the housing recession would leave Americans feeling less secure about their finances. A private survey showed home prices in the United States dropped in the first quarter as the supply of homes exceeded demand.

Home values nationwide declined 1.4 percent from the first quarter of 2006, the first decline since 1991, according to a report yesterday by S&P/Case-Shiller.

The drop in prices over the last year pales in comparison to the 157 percent gain over the previous 15 years.

"The drop in prices isn't going to have any impact at all on people's spending patterns unless they bought one or two years ago," said Roger Kubarych, chief U S economist at Unicredit HVB in New York.

The Conference Board's survey showed the share of Americans who plan to buy a home in the next six months slipped to 2.9 percent from 3 percent.