Do changes in consumers' home buying attitudes predict directional change in home sales?

The Survey of Consumers probes consumer sentiment on personal finances, business conditions and buying conditions. We focus on the latter category by examining the surveys question ‘Generally speaking, do you think now is a good time or a bad time to buy a house?’ and the follow-up question ‘Why do you say so?’ The responses to these questions provide us with several measures of consumers' home buying attitudes. We show that changes in survey data on home buying attitudes (measured by consumers' assessments of current and future mortgage interest rates and house prices) accurately predict the direction of change in home sales 3 months later.