American households turned sharply gloomier in September, and the deterioration reached the part of the survey that housing cares about: consumers’ assessment of their own finances.
The Conference Board’s Consumer Confidence Index, released Tuesday, Sept. 29, fell to 81.9 from 88.6 in August. The Present Situation Index, which measures how consumers rate business and labor conditions right now, dropped 7.9 points to 109.3. The Expectations Index, covering the six-month outlook, fell 5.9 points to 63.6.
“The Consumer Confidence Index deteriorated notably in September, following two prior months of softening,” said Dana M. Peterson, chief economist at The Conference Board.
The finance question that flipped
The most consequential line in the release is not the headline index. Consumers’ views of their family’s current financial situation turned negative in September — only the second time that has happened since the question was introduced four years ago.
That is the reading that governs whether a household lists, trades up or renews a lease. Purchase intentions moved with it: plans to buy a home declined slightly on a six-month moving-average basis.
The National Association of Home Builders’ breakdown of the same release, published Sept. 29 by NAHB economist Fan-Yu Kuo, put the share of respondents planning to buy a home within six months at 5.4% — 0.4% for newly built homes, 2.4% for existing homes and 2.6% undecided. Kuo wrote that confidence “plunged to the lowest level since April 2014 as consumers grew more pessimistic about current conditions and the economic outlook.”
Prices and jobs
Two pressures show up in the detail. Write-in mentions of the high cost of goods, services and fuel “rose to new heights,” per The Conference Board, and 12-month inflation expectations climbed to 6.1%.
On employment, the labor market differential — the gap between consumers saying jobs are plentiful and those saying jobs are hard to get — fell to +1.7%, which NAHB described as the lowest since February 2021. Expectations for job availability declined as well.
That sits alongside a labor market that looks steady in the official statistics. The Bureau of Labor Statistics reported Tuesday that job openings held at 7.1 million in August, with hires, quits and layoffs all little changed. Households are reporting a job market that feels worse than the aggregate data says it is — a gap that has persisted through much of this year and one RealtyWire noted after August payrolls rose 162,000 even as Fed hike talk returned.
A recession signal, 20 months running
The Expectations Index at 63.6 is well under 80, the level The Conference Board has historically flagged as often signaling a recession within a year. Kuo noted that September marks “the twentieth consecutive month for which the Expectation Index has been below 80.”
Twenty months of a recession signal without a recession is its own kind of information. It suggests either that the threshold has lost some predictive power in this cycle, or that households have been absorbing a slow squeeze — higher prices, higher borrowing costs — that has not yet produced the break the indicator anticipates. Either reading argues against treating the number as a countdown.
What it means for the fall market
Sentiment is a soft indicator, and it has been a poor predictor of transaction volume on its own. What makes this print worth an agent’s attention is the combination: a household finance question turning negative, inflation expectations at 6.1%, and financing costs moving the wrong way at the same time. Freddie Mac’s 30-year fixed average was 7.03% for the week ending Sept. 24.
Builders were already seeing it. RealtyWire reported on Sept. 16 that builder confidence fell to a one-year low with two-thirds of builders offering incentives — the supply side pricing in exactly the demand hesitancy this survey is now measuring on the household side.
The next test is Friday’s employment report, which will show whether the labor market consumers are describing is the one the payroll data finds. Additional housing market coverage is here.
