The S&P CoreLogic September home price index saw a 10.7% y/o/y increase, continuing to slow due to tough comps and outright declines m/o/m for a 3rd straight month for reasons we all know. The sunbelt states led the gains with Miami, Tampa, Charlotte, Atlanta and Dallas the top 5. The smallest increase was in San Francisco of only 2.3% followed by Seattle, Minneapolis, DC and Portland.
Again, the only question for the housing market right now as long as mortgage rates stay between 6.5-7% is where do home prices settle out at in terms of gains in some markets and declines in others. For the first time buyer, lower prices would be a really good thing in order to offset the sting of high interest rates.
Home Price Index y/o/y
The November Conference Board’s consumer confidence index fell 2 pts m/o/m to 100.2 about as expected. Both the Present Situation and Expectations components declined. One yr inflation expectations rose to 7.2% from 6.9% and that’s a 4 month high.
After weakening last month, the answers to the labor market questions were mixed. After falling by 4.4 pts in October, those that said jobs were Plentiful rose 1 pt. There was no change to those that said they are Hard to Get after rising by almost 2 pts last month. There was a .9 pt drop in those expecting ‘More Jobs’ after rising by 2.1 pts in October. Those that expect ‘Fewer Jobs’ rose to the highest in 5 months. Income expectations moderated off the highest level since July 2021.
After improving last month, spending intentions softened again. Those that plan to buy a car gave back almost all of the 3 pt rise seen in October. Those that plan on buying a home fell 1 pt after jumping by 2.4 pts last month. Plans to buy a major household appliance fell 7.4 pts to match a 4 month low.
The Conference Board said simply, “The combination of inflation and interest rate hikes will continue to pose challenges to confidence and economic growth into early 2023.” For perspective, consumer confidence stood at 132.6 in February 2020 and bottomed at 85.7 in April 2020. The question here as we look to 2023 is how much does the sour mood impact spending behavior. The mood of low to middle income spenders are certainly influenced by their wages relative to their cost of living because of the outsized percentage of the latter relative to the former. The higher income consumer will be more influenced by the level of their stock portfolio. ALL will be impacted by the state of the labor market and to the extent the unemployment rate rises from here. I expect a 4 handle in the unemployment rate in the next few months.
Consumer Confidence
One yr Inflation Expectations