Home Price Index vs. Consumer Confidence

Chart of the Week for February 29, 2008 - March 7, 2008

Throughout the recently ended real estate boom, economists purported consumers had buoyed their balance sheets with rising home values. The recent housing downturn may be exerting pressure on consumer's bottom-line and lowering their confidence in the U.S. economy. The chart above illustrates the changes in housing values and consumer confidence as represented by their respective indices. The S&P/Case-Shiller U.S. National Home Price Index is a broad, market value-weighted composite of single family home price indices for the nine U.S. Census divisions and is calculated quarterly. The Conference Board Consumer Confidence Index measures the level of confidence individual households have in the performance of the economy.

Since first quarter 2007, both indices have moved down with the housing index dropping 7% and the consumer confidence index dropping 16%. The drop in consumer confidence may be evidence that the well published housing market turmoil and its affects on the broader economy may be having an affect on consumer confidence.

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