Sales of previously owned homes increased in May to the highest level in more than three years. The manufacturing sector also improved in June. Sales of existing homes went up 4.2 percent to 5.18 million annualized rate, according to the National Association of Realtors. The Federal Reserve Bank of Philadelphia announced that its factory index gained to the highest level since April 2011. This was above the forecasts made in a survey made by Bloomberg.
The high demand and low supply led to the increase of average home price in May by the most in more than seven years. This could result to more advances in household spending and confidence. Stocks fell as the improving economy made it more likely for Fed policy makers to begin reducing the amount of money of its stimulus program.
The Standard & Poor’s 500 Index dropped 2.5 percent to 1,588.19 at the close of trading in New York. It was the S&P 500’s largest one day loss since November 2011. Each of the 10 groups in the index declined at least 2 percent, headed by the consumer and utility sector.
Global growth slowed down and it led to the decline in equities. Manufacturing in China dropped at a faster rate in June that threatened the momentum of an economic recovery in the euro region from its longest recession.
Factories in the United States bucked the cooling markets overseas. The Federal Reserve Bank of Philadelphia’s general economic index went up to 12.5 from minus 5.2 the previous month. Readings higher than zero show expansion in the region that includes eastern Pennsylvania, Delaware and southern New Jersey.
The index readings were stronger than the report from the New York Fed, which also showed an increase. All the sub measures in the Philadelphia index increased, including orders and sales.