Consumers are becoming ever more confident. That is a very good sign for home sales. Only by believing in a better future will consumers make expenditures that are longer-lasting.
In March, the consumer confidence index rose to 101.3. An index reading of 100 or better is a terrific sign that a majority of people in the country believe in a better future. January’s figure was also above 100. The last time consumers were this happy was prior to the Great Recession in 2007.
One can be rich, but if they have anxiety about the future then they will not spend or invest. Conversely, one may not be rich but if they are confident of a better condition in the future then they will spend –even if it means borrowing money. Academically talented students have no qualms about borrowing to attend medical school, for example, as long as they believe there will be a nice future payoff. Renters with a good credit and enough financial resources will also want to borrow to buy a house if they believe in a better future. With home prices rising in many areas of country, consumers evidently are becoming more confident of the housing market.
REALTORS® are also expressing increased confidence no doubt based on many interactions with their clients. Particularly they are expressing better times for single-family home sales.
Without hope, what is there to get people out of bed in the morning? There is nothing possibly worse than not believing in better times ahead. The sharp retort “Frankly, my dear, I don’t give a damn” in the ending of Gone with the Wind is said to be one of the most memorable movie phrases of all time. The headstrong Scarlett was not going to let that be the final word, however. She said to herself “After all, tomorrow is another day.” American consumers in 2015 have finally shaken off their depressive feelings.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.