Dive Brief:
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Consumer confidence beat analyst expectations of a decline to reach a score of 118.9 for June on an index kept by The Conference Board, according to CNBC. The index was 117.9 in May and reached a cycle high of 125.6 in March.
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The share of people who said business conditions are “good” rose from 29.8% to 30.8%, while those who said they are “bad” dropped to 12.7% from 13.9%.
- The share of respondents who planned to purchase a home within six months decreased to 5.9% in June as opposed to 6.1% in May, according to the National Association of Home Builders.
Dive Insight:
Although buyers remain largely optimistic about purchases in general, their confidence could be waning when it comes to making a home purchase. Housing demand rose 11.3% from April to May to its highest level since January 2013, when Redfin started tracking the information. Meanwhile, inventory for existing homes was at a 4.2-month supply in May, while new homes had a 5.3-month supply for the month.
That high demand and limited inventory is making it a challenge for buyers to find a home they can afford. Fannie Mae’s Home Purchase Sentiment Index dropped half a percentage point in May to a mark of 86.2. Although that’s less than one percentage point higher than a year ago, only 27% of Americans believe now is a good time to purchase a home — that’s an 8-percentage-point drop and an all-time low for the survey.
Meanwhile, owners who want to sell their homes have been hesitant to do so because of the fear of not being able to find another house in time that they can afford, due to the inventory shortage. That is contributing to the continued declines in existing-home inventory.
The general upward trend in consumer confidence since the recession is a largely positive sign for homebuying, indicating to builders that demand is there.
However, headwinds to realizing that demand, including lot and labor shortages, were contributing factors to a decline in the industry’s measure of builder optimism in June. Builder confidence in the business potential for new, single-family construction dropped two points in June and May’s high score was also revised down one point on the National Association of Home Builders/ Wells Fargo Housing Market Index. Current and future sales expectations as well as buyer traffic each dropped by two points for the month