Consumer confidence turned down again in September following a modest improvement in August. The Conference Board Index of Consumer Confidence fell 4.7 points to 48.5 in September. The decline was driven by deterioration in consumers’ outlook, with the expectations index falling 6.6 points to 65.4. Their assessment of current conditions also decreased, down 1.8 points to 23.1.
Consumers continue to be pessimistic about current and future employment prospects, with 46% (up from 45% in August) indicting that they are finding jobs hard to get and 23% (up from 20%) expecting fewer jobs in the future. They are also concerned about business conditions, with 46.1% (up from 42%) appraising current business conditions as bad, and 16% (up from 13%) expecting business conditions to get worse before they get better.
Confidence in the housing market deteriorated in September, with only 1.9% of respondents indicating that they were planning to buy a home in the next 6 months – down from 2.1% in August. Around one fifth of those planning to buy a home in September (0.4% of respondents), indicated they were considering buying a new home. These numbers are close to record lows and are less than half of the previous minor peak of 4.1% of respondents indicating that they were planning to buy a home and 1.5% planning to buy a new home in February 2006.
The pessimistic employment outlook continues to restrain home buying demand, with home sales, both new and existing, close to record lows. Until the employment and business outlook improve we can expect housing demand to remain weak. While the economic recovery slowed in the second and third quarters of 2010, conditions are expected to improve in the fourth quarter of 2010 with momentum building through in 2011. This will support job growth and buoy consumer confidence through 2011. As job growth strengthens and consumer confidence builds, we can expect substantial gains in housing demand through 2011 and 2012.