By Lucia Mutikani

WASHINGTON (Reuters) -U.S. consumer confidence fell to a six-month low in August as concerns about soaring COVID-19 infections and higher inflation dampened the outlook for the economy.

The survey from the Conference Board on Tuesday also showed consumers were less upbeat about the labor market. They were less inclined to buy a home and big-ticket items like motor vehicles and major household appliances over the next six months, supporting the view that consumer spending will cool in the third quarter after two straight quarters of double-digit growth.

Still, more consumers planned to go on vacation, indicating a rotation in spending from goods to services was underway as economic activity continues to normalize following the upheaval caused by the coronavirus pandemic. Increased spending on services, which account for the bulk of economic activity, should keep a floor under consumer spending.

“While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead,” said Lynn Franco, senior director of economic indicators at the Conference Board in Washington.

It mirrored the University of Michigan’s survey of consumers, which showed sentiment tumbling in August because of rising prices for goods like food and gasoline, as well as the resurgence in COVID-19 cases that has been driven by the Delta variant of the coronavirus.

The Conference Board’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, slipped to 42.8 this month from 44.1 in July. This measure closely correlates to the unemployment rate in the Labor Department’s closely watched employment report.

Fewer households intended to buy long-lasting manufactured goods such as motor vehicles and household appliances like washing machines and clothes dryers, the survey showed. But the share of consumers planning to go on vacations rose, with most expecting to travel domestically and many intending to fly to their destinations. That should help to offset the drag from reduced spending on goods.

Despite the anticipated slowdown, the foundation for consumer spending remains strong, with households sitting on at least $2.5 trillion in excess savings accumulated during the pandemic. Gross domestic product growth estimates for the third quarter are around a 5% annualized rate. The economy grew at a 6.6% pace in the second quarter.

Stocks on Wall Street were trading mostly lower after recent strong gains. The dollar was largely flat against a basket of currencies. U.S. Treasury prices were lower.

HOME PRICES JUMP

The Conference Board survey also showed less enthusiasm among consumers for home purchases over the next six months amid higher house prices, which are sidelining some first-time buyers from the market.

Demand for housing soared early in the pandemic as Americans sought more spacious accommodations for home offices and home schooling, but supply severely lagged, fueling house price growth. COVID-19 vaccinations have allowed some employers to recall workers to offices. Schools and universities have reopened for in-person learning.

A separate report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index jumped a record 18.6% in June from a year ago after rising 16.8% in May. Economists, however, believe that house price inflation has peaked, with homes becoming less affordable especially for first-time buyers.

“Some early data suggests that the buyer frenzy experienced this spring is tapering, though many buyers still remain in the market,” said Selma Hepp, deputy chief economist at CoreLogic. “Nevertheless, less competition and more for-sale homes suggest we may be seeing the peak of home price acceleration. Going forward, home price growth may ease off but stay in the double digits through year-end.”

A separate report from the Federal Housing Finance Agency (FHFA) showed its house price index rose a record 18.8% in the 12 months through June. House prices surged 17.4% in the second quarter compared to the same period in 2020. FHFA believes house prices peaked in June.

The FHFA index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac.

(Reporting by Lucia Mutikani; Editing by Paul Simao)