Despite a monthly decline in the Consumer Confidence Index for October, recently released by The Conference Board, confidence has been trending up and remains relatively high by historical standards. This article from the NAHB Eye On Housing blog delves further into the results of the report, specifically highlighting respondents’ expectations regarding interest rates, and their plans to buy new homes.
In the October survey, 62.7% of respondents reported they expect interest rates to be higher in the upcoming twelve months, down from 64.4% in September, and more people expected interest rates to remain at the same level in the upcoming twelve months, perhaps anticipating the lack of action taken at the Federal Reserve regarding increasing interest rates (FOMC).
The impact of expectations of changing interest rates on plans to buy a home is relatively weak. Instead, overall consumer confidence has a much stronger impact on plans to buy a home. Despite the monthly decline in overall confidence and consistent with the steady upward trend since the end of the recession, the Conference Board reported an increase in the share of respondents planning to buy a home within six months, from 5.8% in September to 6.3% in October. Also, 1.4% of respondents reported they have plans to buy a new home within six months, higher than 1.3% in September.
