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.
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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.
