Consumers cut back spending, but housing interest holds up
Consumers grew more cautious about spending in May as inflation remained elevated, but interest in existing-home purchases held up better than broader consumer sentiment.
Consumer confidence slipped slightly nationwide in May as inflation and gas prices continued to pressure household budgets, though interest in buying existing homes showed modest improvement in recent months.
The Conference Board found that rising prices are changing consumer behavior. Two-thirds of respondents to its monthly survey said they are cutting back spending because of higher prices, with many delaying larger purchases. Spending plans for furniture, appliances and electronics also remained weak, suggesting many households are still cautious about moving-related and other discretionary expenses.
The report follows a separate University of Michigan consumer sentiment survey released last week that fell to a record low this month.
Gas prices climbed to a nationwide average of $4.49 per gallon in May, up from $2.98 before the war in Iran began in late February. Inflation rose 3.8% in April, the highest level in three years, while inflation-adjusted hourly earnings declined from a year earlier for the first time in three years.
For housing markets, confidence and sentiment data can offer insight into how comfortable consumers feel making large financial commitments. While the readings do not directly predict home sales, they can help explain why some buyers move forward while others delay purchases or adjust budgets.
That may be especially relevant in Florida, where many home purchases are tied to relocation, retirement and discretionary lifestyle moves that consumers may postpone during periods of economic uncertainty.
The Associated Press contributed to this report.
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