HVAC buying indicator plunges, dragging down consumers’ economic views

U.S. consumers’ outlook on buying large household durables — an indicator of HVAC purchasing intent — plunged in October. 

What’s happening: A University of Michigan index measuring whether consumers think it’s a good or bad time to buy ‘major household items’ fell 18 percent month-over-month in October, according to data released Friday, marking the largest monthly decline in the past year. 

• Consumers’ assessment of current economic conditions also fell during the month, “driven entirely” by the drop in buying conditions for large household durables, per a news release. 
• The university cited higher interest rates and rising concerns about the affordability of such purchases as the driving force behind the decline.

Zoom out: Overall consumer sentiment in October fell just 0.2 percent from September, according to Friday’s data; however, it remains 10 percent below a year ago — and 15 percent below February, just before the Iran conflict. 

Of note: Homebuying conditions also plunged during the month, with 85 percent of consumers indicating that it’s a bad time to buy a house. The share blaming high interest rates rose from 47 percent in September to 62 percent. 

What they’re saying: “[A]bout 69% of consumers expect interest rates to rise in the year ahead, the highest since April 2023, suggesting that consumers anticipate further deterioration in buying conditions,” Joanne Hsu, the university’s survey director, said in a statement. 

• “These increases are seen across the political spectrum, with Republicans exhibiting the largest proportional rise,” Hsu said. “Similarly, consumers with no stock holdings or very small holdings also report increased concerns over the effect of high prices on their personal finances over the course of the year.”

Looking ahead: The University of Michigan will release its preliminary consumer sentiment reading for November on November 6.