Consumers Are Feeling It
Photo by Jose Matos on Unsplash
Confidence is hard to measure and easy to feel. This month, the measurement caught up with the feeling.
The Conference Board's consumer confidence index fell 6.7 points in September, to 81.9 from 88.6. That is the lowest reading since 2014. The report came out Sept. 29.
The details are more telling than the headline. The Expectations Index dropped to 63.6, which says people are worried about what is coming more than they are about today. The Present Situation Index, at 109.3, is the steadier of the two. Average 12-month inflation expectations came in at 6.1%. And 68.4% of consumers expect higher interest rates.
That last number lines up with what is happening in mortgages. Buyers expect rates to rise, and they have been rising.
The group to watch in Los Angeles
Upper-middle-income households saw the steepest six-month decline in confidence. That matters here. These are often the move-up buyers, the people who sell a condo or a smaller house to buy something larger. When that group hesitates, it can ripple through several rungs of the market at once.
A note of caution
Marketplace points out that a single month could be an anomaly. I agree that one reading is not a trend. But I would not dismiss it either, especially given how closely it tracks the other rate news.
What I would tell clients
If you are a seller counting on a move-up buyer, price and prepare the home with care. Expect buyers to be thoughtful about every dollar.
If you are a buyer, a cautious mood can work in your favor, but only if your own finances are solid. Confidence in the headlines is not the same as confidence in your own budget, and the second one is the one that counts.
Sentiment surveys describe a mood. They do not set the price of your house or decide whether a purchase is right for you. Still, the mood is real, and it shapes how people behave at the table. I would rather you hear about it from me than be surprised by it in an offer.
