Takeaways:
- Compared to the beginning of this year, consumers are less financially stressed, which bodes well for home sales activity moving forward.
- Consumer anxiety dropped by 0.1 point to 66.9 in August.
- The main reasons for the decline in financing anxiety are the improving labor market, the prospect of future employment in higher-paying jobs and a rise in current earnings.
Compared to the beginning of this year, consumers are less financially stressed, which bodes well for home sales activity moving forward.
Consumer anxiety dropped by 0.1 point to 66.9 in August, according to a Money Anxiety Index compiled by Dan Geller, a behavioral finance expert.
For context, since January 2015 the index has declined by 5 points and dropped by 7.1 points since August 2014 — mirroring the decline in the unemployment rate.
The main reasons for the decline in financing anxiety are the improving labor market, the prospect of future employment in higher-paying jobs and a rise in current earnings.
According to Geller, the decrease in anxiety among consumers has and will have a positive effect on home sales activity, as less anxiety means more people are willing to take on more debt/mortgage risk.
“This is the segment of the population — mortgage people — we are waiting for,” Geller said, noting that the number of buyers closing via all cash has recently dropped.
A number of these “mortage people” are likely millennials, a segment of buyers expected to drive sales activity moving forward.
Geller points to a July jobs report that showed an addition of 215,000 nonfarm jobs, an increase of 0.5 percent in hours worked and a 0.2 percent rise in average hourly earnings. The most jobs were added in the professional and business services sector, with 40,000 net new jobs.
This money anxiety index seems to contradict a recent Fannie Mae survey that found consumers’ attitudes toward owning and selling a home were less optimistic in July — primarily because of personal finances and the direction of the economy.
According to Fannie’s findings, the number of consumers who believe now is a good time to sell a home fell to 45 percent in July. At the same time, those who believe it is a good time to buy dropped to 61 percent — an all-time survey low.
