Consumer Confidence Drives Consumer Spending Indexed Growth of Consumer Confidence, New Home Sales, and Existing Home Sales 2007 to 2015 YTD
December 23,
2015 by in General 
This is the final factoid in a series of four factoids exploring the impact of consumer confidence on a rising demand for consumer products, especially durable goods. Consumer confidence, measured monthly by The Conference Board, is “a barometer of the health of the U.S. economy from the perspective of the consumer”.
A major piece of the consumer spending pie is housing, especially new home sales. Economic conditions drive the homebuilding industry and once building slows, it takes a while for housing starts to catch up once the consumer starts to regain confidence.
New Home Sales plummeted alongside Consumer Confidence as the Housing Industry went bust during the Recession taking almost two years to bottom out after the confidence began to recover. A drop of 61 percent in New Home Sales occurred from 2007 to 2011. As the confidence in the economy picked up, Housing Starts ignited and New Home Sales are finally on a steady rise – growing 68 percent from 2011 but still only reaching a 66.2 index in 2015 YTD. Existing Home Sales also felt the effects of a decrease in Consumer Confidence – dropping down to 74.1 index in 2010, but were quicker to recover due to an already present housing inventory.
Source: The Conference Board: Consumer Confidence Index, U.S. Census Bureau