The University of Michigan's Survey of Consumers recently published preliminary figures showing consumer sentiment falling for a fourth month straight, down 5% in November. The Survey of Consumers, the longest-running consumer sentiment survey, asks standardized questions to consumers each month to measure expectations across all aspects of the economy, including housing.
Consumer sentiment fell to 60.4 in November 2023, well below the 15-year median sentiment level of 79.3, as ongoing global tensions and rising interest rates dampened the outlook despite a modest improvement in personal finances and a rise in stock market-related optimism.
Data from the Survey helps specifically measure consumer confidence in the housing market. Within September, 78% of consumers believed it was a bad time to buy a house, mirroring the results observed in the recent Fannie Mae National Housing Survey. Interest rates remain the primary concern among consumers buying, with 61% of respondents citing interests – a growing concern noted by the Director of the Survey.
Consumer sentiment has long been a key indicator for housing and has even been used in predicting the turning points in the housing market. With concerns for interest rates climbing, potential homebuyers are increasingly sitting on the sidelines waiting for potential future declines in interest rates. These potential home buyers result in pent-up demand for housing that could respond quickly once interest rates fall.
Plotify's Takeaway:
- The University of Michigan's most recent Survey of Consumers indicates a decline in consumer sentiment, with a 5% drop in November 2023.
- Consumer confidence in the housing market has waned, with 78% of individuals surveyed in September believing it is a bad time to buy, and 61% of consumers citing concerns about high interests.
- Declining consumer sentiment on interest rates could result in additional pent-up potential homebuyer demand that could quickly respond to lower interest rates.
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