The pace of new home sales continue to accelerate through the winter months, though the snow has stifled last month’s expansion to 3.7%. New Home Sales rose 12% in 2016, the quickest growth in 10 years. It’s probably a good thing to note here that new homes make up just 10% of the overall market. It’s getting more expensive to buy that new home smell: the Median Home Price for a new home is $312,900, a jump of 7% from this time last year. By comparison, the Median Home Price for an existing home is quite a bit lower at $228,900. New carpet and new paint is good enough for an increasingly larger majority of the population: the number of Existing Home Sales increased 5.69% last month. Buying a home is still one of the smartest things you can do for yourself. The forecasted appreciation rate for a home in Utah for the 2017 year is 4.8%, which is higher than the cost to borrow the money to finance it. It’s a good time to lock in that fixed rate still!
Hesitation is that thing that mother nature gave us to protect us from ourselves. It saves us from the potential for pain, which also prevents our growth and inhibits our burgeoning character. Wow, that was deep for a Friday morning! Nothing gets me waxing philosophical like the contemplation of spending money.
The monthly reading of Consumer Sentiment was released today. This survey measures consumers’ attitudes and expectations of both present and future economic conditions. In a lab, Consumer Sentiment should predict Consumer Spending, including Retail Sales. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend their hard-earned money, and vice-versa. Since 2/3 of the economy is in the palms of consumers’ hands, it’s kind of a big deal. And everybody knows that the outlook for our economic growth in the U.S. is still…well, let’s call it “hesitant”.
Today, Retail Sales are up 0.5% over last month, which is always nice to see a positive number there. The dangerous prospect for this quivering little plant in our collective hands is in the outlook for the future of consumer spending. The Consumer Sentiment released this morning shows that our propensity to spend money this month actually dropped almost 4% since the last reading four weeks ago. Consumer Spending is just one piece of economic data, but it is considered to be one of the foremost important, as well as one of the best indicative precursors of that which is to come.