After several years of job gains combined with the hope that the best is yet to come in 2017, consumer confidence surged, according to the new consumer survey report from the National Association of Realtors.
In NAR’s quarterly Housing Opportunities and Market Experience survey, about 900 households answer questions about their confidence in the U.S. economy as well as various questions about their housing expectations.
In fact, in the first quarter of 2017, the number of households that believe the economy is improving soared to its highest share in the survey’s five-quarter history – 62%. This is up from 54% in the fourth quarter and 48% in March 2016.
While this surge in confidence is not exactly unexpected, it is encouraging news for the housing industry.
“Confidence levels generally rise after a presidential election as the nation hopes for the best,” NAR Chief Economist Lawrence Yun said. “Even though it is a highly polarized country, consumers for the most part have upbeat feelings about the economy right now.”
“Stronger business and consumer morale typically lead to even more hiring and spending, which in turn encourages more households to make big decisions like buying a home,” Yun said. “These positive developments would be especially good news for prospective homebuyers in the more affordable Midwest region.”
The Midwest and rural areas saw the highest percentage of households more optimistic about the economy at 67% and 63% respectively. This is up from last year’s 49% in the Midwest and 35% in rural areas.
And this increasing confidence in the economy is also leading to confidence in households’ personal financial future. NAR’s monthly Personal Financial Outlook Index showed the number of households that said their financial situation will be better in six months increased to it’s highest reading ever at 62.6%. This is up from 59.8% in December and 58.1% a year before.
However, renters are not so optimistic as only 56% said now is a good time to buy a home, compared to 57% last quarter and 62% the previous year. For comparison, 80% of homeowners say now is a good time to buy.
“Inventory conditions are even worse than a year ago and home prices and mortgage rates are on an uphill climb,” Yun said. “These factors are giving many renter households a pause about it being a good time to buy, even as their job prospects improve and wages grow.”
“Unless there’s a significant boost in supply levels this spring, these constraints will unfortunately slow or delay some prospective buyers’ pursuit of purchasing a home,” he said.
However, overall consumers are more confident than ever, and NAR isn’t the only company to point that out. Consumers’ faith in the housing market is stronger than it’s ever been before, according to a newly released survey from Fannie Mae.