Boockvar on Home Prices and Consumer Confidence
From Peter Boockvar:
Home price growth still flat lining/Consumer confidence remains subdued
Home price increases continue to flat line, up 1.1% y/o/y in May according to the S&P Cotality national home price index. This 1% ish trend up has now been in place over the past 9 months which I think is a good thing after the huge gains seen in the prior years which certainly benefited current homeowners but priced out first time buyers and froze the pace of transactions, along with the mortgage rate lock effect, at the lowest level in 30 years. It also creates some space and time for wage growth to run faster than home price appreciation to hopefully improve affordability options for young buyers.
Regionally, Chicago was the best market with a 7% rise y/o/y followed by NY with a 4.2% increase, Cleveland up by 3%, Boston home prices higher by 2.75% and San Francisco up by 2.2%. Softer prices were seen in Las Vegas, Seattle, Denver, Tampa and Phoenix, all down between 1-2%.
Home Price Index y/o/y
The Conference Board’s consumer confidence index for July fell to 90.8 from 92.2 and was a bit below the forecast of 92.4. All of the decline was in the Present Situation as the Expectations component was unchanged m/o/m. One year inflation expectations dropped down to 5.5% from 5.9% and back to where it was in February, pre war.
The answers to the labor market questions were mixed. Negatively, those that say that presently jobs are Plentiful fell to the lowest level since February 2021. Jobs Hard to Get fell a touch but off the highest level since February 2021. There are hopes though for improvement as 6 month expectations for ‘more jobs’ rose 1.1 pts m/o/m to 16.7, matching the most since December, but as seen below, still bouncing along the bottom. Income expectations slipped .4 pts but after rising by 1.5 pts last month.
Spending intentions on the big ticket items for vehicles and homes declined with vehicles at a 6 month low. Plans to buy a major appliance rose in most categories.
The Conference Board said this on intentions to spend on services, of course less sensitive to the cost of financing and experiential stuff remains a priority, “Consumers planned to spend more on services over the next six months. Among all service categories, restaurants/bars/take-out, streaming/internet/mobile services, and beauty and personal care remained among the top three spending targets. Beyond the top three, consumers anticipated spending more on many activities in the next six months, such as movies, hotels for personal travel, airfare, and amusement parks, and museums and historical sites. Accordingly, overall travel intentions within six months perked up in July after easing for most of the year. Domestic travel plans recovered while foreign travel plans softened a bit.”
Notably from the Conference Board, “Consumers’ write-in responses on factors affecting the economy continued to be mostly pessimistic in July. References to prices and oil and gas eased in frequency but remain elevated. Comments about food and grocery prices increased. Mentions of war, geopolitics, and conflict eased during the sample period. However, as the fighting has reaccelerated quite recently there could be an increase in these mentions in the revised data for July. Notably, references to jobs and unemployment picked up slightly.”
Bottom line, consumer confidence remains very subdued and so much having to do with inflation and the ever rising cost of living.
Consumer Confidence
One yr Inflation Expectations
Jobs Plentiful
Jobs Hard to Get
Expecting ‘More Jobs’
Position: None
