Transcript for Consumer confidence rises in September
- The state of the US economy. New numbers released today show the housing market is softening as mortgage rates just continue to rise. Meanwhile, concerns are growing over rising interest rates, a possible recession, and the health of the global economy. A lot to discuss. ABC News business reporter Alexis Christoforous is with us now. Oh boy, Alexis. So where do we start? New home sales, I guess. The numbers are out. What does the data suggest about the economy, if we start there?
- Well, this was a big surprise, Kyra. Despite rising mortgage rates and those high home prices, new home sales actually bounced back in August. So here's the number. Sales of newly constructed homes jumping 28.8% in August from July. They were down just 1/10 of a percent from a year ago. All this comes after two consecutive months of declines. Meanwhile, as you can see there, the median price for a new home fell slightly to $436,800. That's down about $3,000 from the previous month.
But before we get too excited here, experts say that that jump in home sales that we saw last month may be a bit of a quirk. And that's because the average interest rate for a 30-year fixed rate mortgage dipped to just below 5% in August. And now just a month later, we have the 30-year fixed rate mortgage pushing towards 7%. We should expect to see September sales fall again.
I want to leave you with a little good news, though, because lumber prices-- remember, they were sky high during the height of the pandemic. They've actually returned to pre-COVID levels. And home prices continue to cool off, especially in some of the markets where they were the highest last month. So we saw sales of homes-- prices, I should say, for homes in San Francisco down 3.6%. Down 2 and 1/2% in Seattle. And in San Diego, home prices fell 2% in July.
Here in New York, prices also out of control. But they were flat last month. So things are starting to trend more for the buyer than the seller. But I think with mortgage rates as high, we still have a ways to go.
- And we're also learning new details about consumer confidence. It increased more than expected in September, basically defying recession fears. So what do you think this might be suggesting?
- Yeah. Another surprise there. Go figure. Consumer confidence higher for the second month in a row despite talk of a recession and high inflation. A lot of that is because we saw a big drop in gas prices. But remember, these numbers are backward looking. This is an August number. So much has changed in just the past month. With mortgage rates now pushing 7%, we'll see where confidence is and if they can sustain that sort of positivity as we head closer to the holidays.
- All right. Also, several other economic reports on tap for this week that will give us, hopefully, some more details on consumer spending and the broader health of the economy amid rising inflation. The stock market, it's always an indicator-- you have taught us that-- of how the economy is faring. We watch it constantly. Wall Street facing another bear market. So is this rock bottom? Can we even ask that at this point?
- Yeah. Exactly. I think it's always a little dicey when we try to time the market either up or down. The Dow Industrials in a bear market, meaning the Dow has now fallen 20% from its recent high. But you know what, these times, they seem scary. You might want to just pull your money out of the market. But history has shown if you stick with your investment plan for the long term, painful periods like these mean that you can actually get what were very expensive stocks at a discount. For many companies, their stock prices are on sale right now. So you might even be able to get some bargains if you stick to your investment thesis.
- So my husband and I were talking about this last night and looking at the 401(k)'s. Look, we're lucky enough to have a 401(k). Not everybody does. And when you're thinking about retiring and you're getting older, we're thinking about our kids, we're thinking about college, I mean, we're down 20%. But then again, we've always talked about how things have recovered. Things eventually get better. Do we just need to not look at our 401(k)'s right now and ride this out, Alexis?
- And I have all the same concerns you and your husband do. And I think so many people watching this do right now. And it is sort of that knee-jerk reaction to say, we have to hoard the money, take the money out of the market, and let's reduce risk. But the fact is that history has shown the market does come back over the long term. And I'd say if you need your money six months or a year from now, you should really look at repositioning your portfolio. But anything further out than that, you're going to miss a huge opportunity here if you start messing with the investments too much. You let what's in there ride. And over the long term when the market rises, you'll be able to reap those benefits.
- Alexis, appreciate it. Thanks so much. Ride it out.
This transcript has been automatically generated and may not be 100% accurate.