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Florida consumer sentiment fell for the third consecutive month in May, a sign that households are still feeling pressure from inflation, energy costs and higher borrowing costs.

The University of Florida’s Bureau of Economic and Business Research said its Florida consumer sentiment index dropped 1.4 points to 72.7 in May, down from a revised 74.1 in April. National consumer sentiment also declined.

The data points to a more cautious consumer mindset heading into summer, and that caution may carry into housing decisions as buyers weigh monthly payments, household budgets and the cost of staying or moving. When confidence weakens, buyers may take longer to make decisions, narrow their search criteria or become more sensitive to total ownership costs.

“The decline in consumer sentiment comes as little surprise given that inflation accelerated during the month, eroding purchasing power and placing renewed pressure on household budgets,” said Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.

Floridians were less optimistic about their personal finances and the national economy over the next year. Views of current personal finances compared with a year ago posted the steepest decline among the five components in the index, falling 3 points from 69.7 to 66.7.

Opinions about whether now is a good time to buy a major household item, such as furniture or appliances, also slipped slightly, suggesting households may be pulling back on discretionary spending. That matters for real estate because big-ticket purchases often reflect how comfortable consumers feel about larger financial commitments.

Sandoval said Florida’s labor market also softened, with the state unemployment rate rising to 4.8% in April and continuing to diverge from the national rate.

“This decline in consumer confidence could slow Florida’s economic growth, as a pullback in discretionary spending may dampen economic activity in the months ahead,” Sandoval said.

Expectations were mixed. Floridians’ outlook for their personal finances a year from now fell 2.3 points, while expectations for U.S. economic conditions over the next year declined 1.2 points. Longer-term expectations for the U.S. economy over the next five years increased slightly.

Sandoval said inflation pressures, especially from volatile energy markets, remain a risk because higher costs can flow into transportation, production and other business expenses. If inflation stays elevated, the Federal Reserve may be less likely to lower interest rates, keeping borrowing costs higher for households and businesses.

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