Confidence and Home Sales Equal Stabilization
An economic recovery may be several months away, but there is a bit of good news regarding consumer confidence and consumer sentiment. In April, the Consumer Confidence Index jumped more than 12 points to 39.2 from March’s 26.9 reading, according to the Conference Board. And, though not at the readings experienced in April a year ago, 62.8, these are levels not seen since November 2008.
Consumer sentiment, too, lifted in April. Reuters and the University of Michigan reported the Index of Consumer Sentiment rose 14% to 65.1 in April. In March, the Index registered at 57.3 and in April 2008, it was 62.6. That’s a positive year-over-year change and a much needed boost to the consumer psyche!
As for the housing industry, the latest pending sales report of existing homes showed growth for the second month. Based on contracts signed in March, the Pending Home Sales Index increased 3.2% to 84.6 from 82.0 in February. And, this has some economic analysts encouraged that the housing market is stabilizing. Current figures from the National Association of Realtors show existing home sales fell 3% in March but February’s numbers showed month-over-month growth for all regions and an overall 4.9% growth rate for the nation. However, there’s no need for alarm. According to NAR economist Lawrence Yun, those are just modest monthly ups and downs. With many first-time buyers looking to take advantage of the $8,000 tax credit as well as low mortgage rates, we can all be hopeful that home sales will be on the upswing going forward and the housing industry will begin to balance itself out.
So, while no one is running screaming through the streets that we are clear of the economic downturn, the news of the pending existing home sales growth, combined with increased consumer confidence should be reasonable cause for retailers to perk up. After all, confidence encourages spending and home sales create the opportunity for consumers to make furniture purchases. That would be good for not only the furniture industry but the entire economy.
