As the housing market continues to evolve, we find that consumer sentiment continues to ebb and flow. In the second quarter administration of the Lifestory Research Home Shopper Confidence Survey, we found that there has been a decline in confidence. As compared to scores in Q1 2015, new home shoppers are less confident that now is a good time to buy a home, they fear being turned down for credit, and they think the health of the economy is weaker.
Among those shopping for a new home, we found among those rating the current market conditions of purchasing a home, that confidence declined 2.5 percentage points among those rating the market very good or excellent (66.3% in Q1 vs 63.8% in Q2). We found the same belief among those not shopping for a home. That is, among those not shopping for a home, there was a 2.1% decline in those believing now is a good time to buy a home (54.0% in Q vs 52.0% in Q2). Moreover, we found among new home shoppers an increase in those stating that they have put off applying for credit for fear of being turned down (28% in Q1 vs. 32.6% in Q2) and we found a decline in those rating the overall health of the economy as good to excellent (49.3% in Q1 vs 42% in Q2).
The survey also found slight changes in home appreciation expectations as well as mortgage interest rates. That is, we found among home shoppers a 1.8 percentage point increase among those saying that they think home prices will go up (50.7% in Q1 vs. 52.5% in Q2) and the survey identified a 5 percentage point increase among home shoppers believing that mortgage rates will rise in the next 12 months (65.6 in Q1 vs 70.7% in Q2).
Home shoppers continue to have a much higher certainty that their incomes will be improving in the coming 12 months as compared to those not shopping for a home (52.2% of home shoppers believe their incomes will increase in the next 12 months vs only 33.5% of people not shopping for a home). We see this same pattern in regards to how people feel about their financial situation today as compared to 2 years ago. Home shoppers are much more likely to report that they are doing better off today as compared to 2 years ago (51.9% for new home shoppers vs. 35.7% of those not shopping for a home).
Despite positive signs in the macro economy, the results from this most recent survey raise concerns that new home shoppers confidence could be faltering. This decline in confidence correlates with shoppers concerns about the overall the health of the economy, their ability to qualify for a mortgage, and their belief that mortgage rates will be rising.
About the Survey
Unlike other national polls tracking consumer confidence, this line of research specifically surveys those that are actively shopping for a new home (as well as those that are not actively shopping for a home). By approaching consumers who are both actively shopping as well as those who are not, we will be able to track changes in consumer confidence based upon home shopping activity. Each wave of the research program surveys 1000 new home shoppers and 1000 people in the general population for a total sample size of 2000 adults. Data are weighted to produce a final sample that is representative of the general population of adults in the United States.