Consumer sentiment, pending home sales data top expectations

The University of Michigan's Consumer Sentiment Index beat March expectations with a reading of 79.4, surpassing predictions of 76.5. This figure marks the highest level since July 2021, indicating a resurgence in consumer confidence.

Additionally, pending home sales data released Thursday morning beat February estimates with a 1.6% month-over-month increase versus the 1.5% expected. The rise in pending home sales is attributed to more individuals entering the workforce and increased inventory levels in the housing market.

Yahoo Finance's Seana Smith and Madison Mills break down the details, analyzing how markets (^DJI, ^IXIC, ^GSPC, ^RUT) are digesting these numbers.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video transcript

SEANA SMITH: And we have some breaking Econ data out right now. First, let's get to consumer sentiment. University of Michigan Consumer Sentiment Index just released, coming in better than expected, rising to 79.4 for the month of March. This is the final reading for the month of March. It was risen from the prelim reading of 76.5. The index reaching the highest level that we've seen since July of 2021.

Looking into this report, some of the commentary that I want to pull out for you. One Consumers are now broadly in agreement that inflation will continue to slow both over the short-term and the long-term. Now, expected change in median prices during the next year fell to 2.9% versus a 3% reading last month.

And also this is worth pointing out here. The share of consumer spontaneously mentioning the upcoming election. No surprise there. It rose to nearly 20%, that was up from just 13% last month. So more and more consumers paying closer and closer attention to the upcoming election in November.

Now, switch over to the February pending home sales data that we also just got out. The latest reading on the housing market, pending home sales rising to one point rise, 1.6% on a month over month basis. That was slightly better than what the Street had been expecting. They were looking for a rise of just about 1.5%.

NAR Chief Economist Lawrence Yun, who actually joined the program earlier this week, he wrote in this release that ongoing job gains are clearly increasing demand, along with more inventory. Now in the Northeast, though, we did see a drop of about 3/10 of a percent. In the Midwest, though, pending home sales were up 10.6% on a month over month basis. In the South, it was up just about 1.1%. In the West, however, it fell there off about 6.5% on a month over month basis. Maddie.

MADISON MILLS: Well, Seana, I want to take a quick look at the market action here because given that better than expected consumer sentiment data, it does seem to me like we're going to have a little bit more upside throughout our day. But we're seeing not a ton of action. The S&P up about a tenth of a percent. The NASDAQ and the Dow Jones basically unchanged here. That is further in the green than we were seeing earlier this morning. So it could be an indication of those consumer sentiment numbers.

It kind of fueling a little bit of optimistic reaction, but we might see that kind of fade as we get into the latter half of the day because we are at the end of the quarter. We've got quarterly rebalancing coming in. And that could be something that leads to a little bit of profit taking as money managers start to try and get a little bit of something to say to their clients as we head to the end of the quarter here. So, interesting to see what the movement is.

We're still seeing the Russell up about 4/10 of a percent here. So seeing a little bit of that broadening in the market. We're going to talk a little bit more about this, though, because US consumers feeling a little more optimistic obviously given those numbers. The Consumer Sentiment Index as a reminder, registering a reading of 79.4. That's according to the University of Michigan, and that is above the Street's expectations, which were at 76.5.

We're also looking at the one year inflation expectation coming in at 2.9% versus the three previous readings, the previous reading rather which was 3%. And that is below last month's data, showing consumers are hopefully starting to feel a bit better about the trajectory of inflation.