Take high gas prices, add rising interest rates and a slowdown in the housing market and you have a recipe for slumping consumer confidence, University of Florida researchers said Tuesday.
The Florida Consumer Confidence Index dropped eight points in February, to 87. The biggest decline was in expectations for U.S. economic conditions over the next five years.
"Higher interest rates have already begun to affect housing sales and perhaps more importantly for the consumer, opportunities for refinancing and home equity loans," said Chris McCarty, director of survey research for the university's Bureau of Economic and Business Research.
Higher rates combined with a slowdown in price appreciation means it no longer pays for consumers to refinance to get equity out of their homes, he said. "This effectively removes what had been a major source of spending power for consumers."
A report from the Florida Association of Realtors Tuesday offered more evidence that the housing market has cooled. January sales of existing single-family homes were down 8 percent in the Tampa Bay area and 19 percent statewide compared to January 2005. Condo sales were up 7 percent in the Tampa Bay area and down 18 percent statewide.
The Realtors group's state president, Mike Dooley, said "buyers are seeing more choices" as inventories rise.
Prices have softened although they remain substantially higher than they were a year ago.
The average price of a single family home was $219,700 in the Tampa Bay area, down from $223,200 in December, but up from $172,800 a year ago.
Statewide the average sale price was $248,600, up from $247,000 in December and $205,100 a year ago.
UF researcher McCarty said consumer perceptions of their personal finances have fallen in spite of gains in the stock market. He said part of that may be a reaction to higher tax bills as more taxpayers are affected by the Alternative Minimum Tax.
Helen Huntley can be reached at firstname.lastname@example.org or (727) 893-8230.