Increased confidence is expected to accelerate consumer spending and improve U.S. housing demand throughout 2013.
Consumer spending is key, says Ron D'Vari, CEO and co-founder of
So far a trend of higher new home sales and expanding existing home sales “are still significantly below pre-credit-crisis years,” he says. But the 8% annual rise in home prices in the top 20 metropolitan areas “has been powerful in fueling consumer confidence, albeit from a low base” since sales are partially driven by investors and not for primary residence properties.
However, he argues, after five years of a torturous economy that “created a significant pending demand,” in 2013 consumer spending “will be propelled by gradually improving employment, sustained strength in housing and buoyant stock prices.”
Findings from the Consumer Electronics Association of Arlington, Va., show consumer confidence in the overall economy increased in March after two consecutive months of declines.
The CEA Index of Consumer Expectations, which measures consumer expectations about the broader economy, increased 4.2 points in March to 169.5, but has not yet returned to March 2012 levels.
Positive factors, according to CEA’s chief economist and senior director of research, Shawn DuBravac, include a 4% increase in equity prices in February and continuous improvements in the housing market.
Lower year-over-year sentiment levels indicate “consumers are perhaps generally shrugging off higher payroll taxes, sequestration and uncertainty from across the Atlantic,” DuBravac said. Regardless, “the economy continues to exhibit strength.”
As expanding economic activities in housing and various manufacturing sectors are broadening the U.S. economic recovery, D'Vari says, investors can gain future insight by watching U.S. consumers. Absent a major global set back, he says, they are “one of the leading indicators” of housing market and overall economic growth.
