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Conference Board's Franco, Zillow's Gudell, on Economy (Audio) · Bloomberg Intelligence

• 0:01
  Speaker 1: This is taking Stock with pim Box and Kathleen has
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  Speaker 1: on Bloomberg Radio. The Reserve starts at two day policy
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  Speaker 1: meeting today with some very important economic reports on the table.
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  Speaker 1: New home sales in the United States jumping to their
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  Speaker 1: highest level since February two eight, consumer confidence holding steady,
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  Speaker 1: suggesting the consumer may continue to spend just enough to
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  Speaker 1: keep the economy growing healthily and maybe even to buy
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  Speaker 1: some new homes along the way. Joining us now here
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  Speaker 1: in studio Lynn Franco, Director of Economic Indicators at the
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  Speaker 1: Conference Board. They put out the monthly Consumer Competence Report,
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  Speaker 1: and Spenda Goodell, she's chief economist at Zello you know
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  Speaker 1: them well, online housing market based in Seattle, Washington. She
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  Speaker 1: too is in studio today, so we welcome you both.
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  Speaker 1: Thank you. Thanks. So let's start with you. Consumer confidence nothing,
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  Speaker 1: you know, a little wiggle here and there, but pretty
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  Speaker 1: much holding steady last month. Yes, it's sort of nothing gained,
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  Speaker 1: nothing lost, I think is the theme this month. We
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  Speaker 1: did a little bit of an optic in the present situation,
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  Speaker 1: so we know that the economy continues chugging along and
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  Speaker 1: looking ahead. Consumers are cautiously optimistic, as they have been
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  Speaker 1: now for quite some time. I gotta ask you about
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  Speaker 1: housing because I was just looking at the list of
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  Speaker 1: all the different metropolitan areas and the median days on
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  Speaker 1: the markets. Off you're trying to sell a house or
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  Speaker 1: buy a house, you can maybe I don't know, a
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  Speaker 1: hundred and three days in the Miami Fort Lauderdale area,
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  Speaker 1: but if you go to San Francisco only forty three days,
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  Speaker 1: tell us about that, well, it shows how fast the
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  Speaker 1: market is moving in a lot of these areas. If
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  Speaker 1: you think about, you know, San Francisco taking forty five days,
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  Speaker 1: you know an average to to move home, you're really
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  Speaker 1: going pending after a week or a few days on
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  Speaker 1: the market, and the rest of the time you're under
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  Speaker 1: contract and you actually have to go through closing, And uh,
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  Speaker 1: it just shows that it's an incredibly competitive market. It's
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  Speaker 1: a market where people are moving fast, and some places
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  Speaker 1: are moving much faster than others. Of course, but over
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  Speaker 1: all we've seen, you know, nationally, the days on market
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  Speaker 1: come down quite significantly. So uh, I want to ask
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  Speaker 1: you Lynn Franco Conference Board Consumer Confidence. You ask about
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  Speaker 1: the labor market. Of course, jobs plentiful, hard to get.
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  Speaker 1: You ask about incomes are they going to grow, etcetera.
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  Speaker 1: No specific questions about housing except for plans to buy homes.
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  Speaker 1: How much do you think it feeds into consumer confidence
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  Speaker 1: If prices are rising as they've done, not not roaring
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  Speaker 1: in the caseular home price report, but continuing to rise
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  Speaker 1: and seeing you know, the demand for homes getting stronger, well,
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  Speaker 1: I think in terms of your portfolio, that's always a plus.
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  Speaker 1: And we've actually seen a little bit of an uptick
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  Speaker 1: now and people saying that they intend to purchase a home.
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  Speaker 1: On average, it's not as strong as we saw probably
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  Speaker 1: at the beginning of but it does seem to sort
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  Speaker 1: of be curving upward. And I think that feeds into
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  Speaker 1: a lot of the housing data that we've seen over
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  Speaker 1: the past several days. Well, continuing the housing thing, spen
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  Speaker 1: just looking at Boston, for example, seventy one days on
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  Speaker 1: the market, uh, the June Zillo Home Value Index saying
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  Speaker 1: that a house in Boston and ninety four thousand dollars.
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  Speaker 1: It's it's right, it's a it's getting up there. And
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  Speaker 1: that's for the metro. If you actually look at the city,
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  Speaker 1: it's gonna be much higher than that. And I think, uh,
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  Speaker 1: you know, people are confident in housing. They think, you know,
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  Speaker 1: it's the market is doing much better. And so when
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  Speaker 1: you look at the decision of you know, should I
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  Speaker 1: keep renting should I buy? I think a lot of
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  Speaker 1: people want to buy because it's actually a good time
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  Speaker 1: to invest in that home purchase. However, a lot of
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  Speaker 1: people are experiencing roadblocks along the way. They either are
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  Speaker 1: having a hard time saving for a down payment, not
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  Speaker 1: getting a mortgage. But the biggest problem is actually finding
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  Speaker 1: homes to buy. And uh you the good news this
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  Speaker 1: this this morning with new home sales coming out. We've
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  Speaker 1: got a few more of those sitting around now for
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  Speaker 1: for sale. But overall, inventories across the country are relatively restricted,
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  Speaker 1: especially when you're looking at entry level homes. Yeah, a
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  Speaker 1: lot of people are priced out the market. We have
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  Speaker 1: a mortgage brokers, a regular guests on the show, like
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  Speaker 1: three quarters of potential home buyers. And if you look
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  Speaker 1: at California broadly, if you get off the coast, can't
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  Speaker 1: afford to buy a home. Incomes, uh Lyn Franco when
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  Speaker 1: that's another another important part of the consumer confidence report.
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  Speaker 1: If incomes aren't going to grow very much, it seems
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  Speaker 1: it would feed into this issue with housing. But maybe
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  Speaker 1: the good thing is that prices are up and incomes
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  Speaker 1: are growing that fast, we'll we'll see some stabilization in
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  Speaker 1: the housing market, because if you don't make enough money,
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  Speaker 1: your paycheck doesn't grow, you can't afford a more expensive house, right.
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  Speaker 1: And I think we're also seeing sort of a little
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  Speaker 1: bit of a divide in terms of the consumers. Those
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  Speaker 1: at the lower end earning less, are not as confident
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  Speaker 1: as those at the higher end, and I think we're
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  Speaker 1: seeing that also impacts housing, uh, you know, decisions and
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  Speaker 1: who the buyers are. So until we begin to see
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  Speaker 1: I guess a little bit more sort of robust wage
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  Speaker 1: growth at the lower end, I think these are buyers
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  Speaker 1: that will potentially remain on the sidelines. And that actually
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  Speaker 1: is a really interesting point because we're seeing affordability being
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  Speaker 1: much more of an issue at the low end of
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  Speaker 1: the market where wages haven't grown as much, whereas at
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  Speaker 1: the high end of the market affordability isn't isn't an
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  Speaker 1: issue at all. What accounts for this lack of supplies?
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  Speaker 1: Ven you you know, it depends on the market, but
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  Speaker 1: you know, some some markets are seeing still negative equity
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  Speaker 1: problems where homeowners are still underwater where they owe more
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  Speaker 1: in the mortgage than what the house is worth. Um.
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  Speaker 1: But you know, for the fast moving markets like San Francisco, Seattle, Denver,
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  Speaker 1: l a negative equity is not really a sticking point anymore.
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  Speaker 1: It's the fact that we're not building quite as much
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  Speaker 1: as we probably should be building to supply enough inventory.
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  Speaker 1: And we have a bit of a musical chairs problem
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  Speaker 1: going on where sellers don't want to sell despite it
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  Speaker 1: being a very good seller's market, because they don't want
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  Speaker 1: to become buyers. Quick final question de Len frankly a
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  Speaker 1: good five seconds. Is consumer confidence enough to support a
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  Speaker 1: FED rate hike? Now? I think we're not going to
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  Speaker 1: see a FED right how until probably the end of
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  Speaker 1: this year early next year. Thank you very much, Lynn Franco,
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  Speaker 1: director of Economic Indicators at the conference Board. We've got
• 5:59
  Speaker 1: more with Enya Goodell, chief economist for Zillah. They're based
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  Speaker 1: in Seattle. This is taking Stock. I'm pim Fox my
• 6:07
  Speaker 1: co host Kathleen Hayes. This is Bloomberg. H