Economic Snapshot: Consumer confidence improves, strong year-over-year gains in pending home sales

To close out 2014, we have some positive news in consumer confidence and pending home sales. Hopefully this confidence will provide strong economic momentum going into 2015.

Consumer confidence

Consumer confidence improved in December to 92.6, which is up from 91.0 in November and marks the second-highest reading for the index in 2014. October’s reading of 94.5 was the highest since 2007. The present situation index climbed to 98.6 from 93.7 last month, while the expectations index decreased slightly from 89.3 to 88.5.

Consumers who say business conditions are “good” was unchanged at 24.8 percent this month, but those who claim business conditions are “bad” decreased from 21.8 to 19.6 percent. Those who view jobs as “plentiful” rose from 16.2 to 17.1 percent and those who view jobs as “hard to get” decreased from 28.7 to 27.7 percent.

The percentage of consumers who expect business conditions to improve over the next six months dipped slightly from 18.3 to 18.0 percent, but those who expect conditions to worsen also dipped from 10.4 to 10.1 percent.

However, consumers’ outlook for the labor market was a little less optimistic this month, with those anticipating more jobs in the coming months decreasing from 15.5 to 14.7 percent and those anticipating fewer jobs rising slightly from 16.1 to 16.9 percent. Consumers who expected income growth declined marginally from 16.9 to 16.4 percent but those expecting a decrease also declined from 11.0 to 10.0 percent.

Pending home sales

Pending home sales rose to 104.8 in November, up from a revised 104.0 in October and is now 4.1 percent above last year. This is the highest year-over-year gain since August 2013 and the third straight month of YOY gains in the index.

Pending home sales in the Northeast rose 1.4 percent to 89.1 this month and is now 7.0 percent above November 2013. In the South, sales jumped 1.3 percent to 119.7 and are 5.1 percent above last November. In the West, the index increased modestly by 0.4 percent to 98.5 and is now up 4.9 percent YOY. The only decrease was in the Midwest, where the index declined 0.4 percent to 100.0 and is now 0.5 percent below the previous year.

The national median existing-home price in 2014 will be close to $208,000, which is up 5.6 percent from 2013 and is likely to moderate to a pace between 4.0 and 5.0 percent next year. In 2013, existing-home prices rose 11.4 percent.

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