Tag Archives: Consumer Confidence

Now that the overall economy is on more solid ground, Wells Fargo economists suggest that housing may soon follow in its footsteps, according to Wells Fargo's Housing Chartbook for October 2014 released on Thursday.

According to results from Fannie Mae's September 2014 National Housing Survey, Americans' optimism about the housing market recovered last month.

Declines were recorded in both component indices: The group's gauge of current economic conditions fell to 89.4 from 93.9, while the index measuring consumers' outlook fell to 83.7 from 93.1.

September's increase in confidence is the result of optimistic outlooks on the overall economy and personal incomes. In fact, of the two components that make up the overall consumer sentiment index—consumer expectations and current conditions—a rise in the former is solely responsible for the positive movement in September.

The increase in the headline index was driven by a more than four-point improvement in the gauge of consumer expectations, which rose to 75.6. On the other hand, the Current Conditions Index fell more a point to 98.5. According to Paul Diggle, U.S. economist for Capital Economics, the small decline "could reflect the weaker pace of payroll growth in August or even the slowdown in some measures of housing market activity."

Improvements in the labor market in 2014 have not translated to widespread housing market recovery this year, according to the Fannie Mae August 2014 National Housing Survey. Instead, data in the survey indicated that recovery for the housing market will be slow heading into 2015. The number of people in the survey who said they believed now is a good time to sell a home fell six percentage points to 64 percent, an all-time low since the monthly survey began in June 2010. The number of people who said now is a good time to buy a home also declined to 38 percent.

Indeed, 59 percent of households with incomes in the top tier reported being better off now than they were before, while only 36 percent of those in the lower tiers said the same. At the same time, 34 percent of the top-income households reported net income gains, while there were no net gains reported in the bottom two-thirds.

August's increase was driven by an increase in Conference Board's measure of current economic sentiment, which grew to 94.6 from 87.9 in July. Most of that was spurred by more promising reports over the spring and summer as business and labor market indicators improved.

U.S. consumer confidence jumped up more than four points from June to July, signaling a brighter economic outlook among Americans. The Conference Board's Consumer Confidence Index reached 90.9 in the group's July survey, up from 86.4 in June. As of July, the index stands at its highest level since before the Great Recession.

Consumers believe that their outlook is getting better. But they are not necessarily ready to participate in the housing market just yet. The June Housing Survey released by Fannie Mae shows that consumer sentiment toward the housing market is continuing to improve as the overall economic outlook improves but it still sits well below the level necessary for the market to normalize.