The University of Michigans monthly survey of consumer sentiment asks households to rate buying conditions for homes.
The University of Michigan’s monthly survey is an ongoing nationally representative survey based on telephonic household interviews. The Index of Consumer Sentiment (ICS) is developed from these interviews. It gives a very accurate indication of the future course of the national economy. The Index of Consumer Expectations (a sub-index of ICS) is included in the Leading Indicator Composite Index published by the U.S. Department of Commerce, Bureau of Economic Analysis. The Index of Consumer Expectations focuses on three broad areas:
· How consumers view prospects for their own financial situation
· How they view prospects for the general economy over the near term
· Their view of prospects for the economy over the long term
Among other things, the survey asks households to rate buying conditions for homes.
The proportion giving a “good” rating started to give way in 2004, as house prices were climbing to unaffordable levels in many areas, and bottomed out in the summer of 2006 as house prices finally topped out at the national level. But the “good” proportion has been on the rise for about two years now, getting up to 71% in August — back to the mid-2005 level.
Consumers’ ratings of home buying conditions have been driven largely by house price movements. In August, 65% of consumers cited “low prices” as the key reason for viewing home buying conditions as “good,” compared with only 10% at the end of 2005.
Interest rates also can have a major impact on home buying conditions, of course, but rate shifts have had a relatively minor influence on consumers’ ratings during the past two years.
Improving consumer views of home buying conditions obviously do not quickly translate into stronger home sales. But the systematic improvements in recent times are laying groundwork for better sales volume a bit further down the line.
Because all real estate is local, I’d like to conduct my own survey of households in the Boise MSA. So let me know, how would you rate buying conditions for homes in the Treasure Valley?
Chuck Miller GMB CGB CGP MIRM CMP MCSP CSP
President / Builder – Chuck Miller Construction Inc.
(208) 229-2553