The University of Michigan Consumer Sentiment Survey slipped to 88.4 in March, down from February’s 91.3 and its lowest level in six months.
Why should you care about the UofM survey as a homeowner? In a nutshell, you shouldn’t. But, you sort of have to.
Here’s why: Consumer confidence is considered important by markets because hundreds of “real people” are telling the surveyors how they feel about the economy.
The better they feel, the more likely they are to spend money on things like electronics, automobiles, and homes.
But, confidence surveys can be worthless because what people say and what they do are often two very different things.
For example, on the heels of today’s terribly weak UofM survey, the Commerce Department released their Personal Spending report.
We would expect that the falling University of Michigan confidence numbers would translate into lower levels of Personal Spending. On the contrary! Personal Spending was up by whopping 0.6%.
People are less confident about the economy, but are still choosing to spend more.
This is just one more reason why home sales and real estate is an unpredictable market. Emotional decisions rarely follow a predictable path.