Amid the Gloom, Consumers’ View of Buying Conditions for Homes Improves

Consumer confidence fell back sharply in March amid concerns of rising gas and food prices. Consumer Sentiment retreated 12.9% in March to 67.5, according to the University of Michigan consumer survey. This reversed the gains recorded in the prior four months.

The losses were concentrated in the Expectations Index, which fell 19.1% to 57.9.  Consumers are concerned about the prospects for the economy over the next 12 months, with “… the proportion of consumers who expected the economy to improve during the year ahead drop(ping) to 21% in March from 40% in February …”, as well as their own financial position, with “… just one-in-four consumers expecting their financial position to improve during the year ahead …” In addition, consumers no longer anticipate further declines in the unemployment rate over the next six months.

While consumers are concerned about the pace of economic growth and their financial position in the year ahead, their view of their present situation is better, with the Current Conditions Index slipping only 5.1% to 82.5.

Despite their gloomy economic outlook, consumers intend to keep spending, with no decline in their buying attitudes towards a range of consumer durables, including motor vehicles. The index of buying conditions for homes rose to 159, with 78% of respondents identifying that they believe home buying conditions were good—the highest level since May 2009. Low prices (63%) and low interest rates (41%) were cited as the main reasons.  Following weak demand for both new and existing homes in February, the positive attitude towards housing suggests demand is likely to improve as we begin the Spring selling season.



0 replies

  1. Can you help me undersatnd the apparent inverse relationship between “market conditions” and “sentiment.”

    It appears as sentiment rises, buying conditions dip. I could use a definition of the components which make up each of the two metrics.

    Thanks.

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