August 26, 2008 Survey: Americans feel better about economy Play video

(NECN/ABC) - Gas prices are down. Home sales are up. And according to a new survey, that is helping Americans feel better about the economy.

"I'm feeling confident that it's starting to change a little bit better with gas prices but I'm still kind of pessimistic for the future," says consumer Michael Quinn.

Consumer confidence is still about half of what was a year ago. But reports now suggest the badly-beaten housing market may have hit bottom. Sales of new and existing homes rose in July, up 3%.

Realtors say lower prices, down a record 15.5% in the second quarter, are luring buyers in.

"There is a lot of pent-up demand...people that haven't bought over the last year or two...that group has to buy and wants to buy," says realtor Robert Howell.

But most analysts say home prices have a long way to fall in many parts of the country. Add that to the recent ups and downs in the stock market and concerns about the health of the financial sector and you can see why consumers are still wary about the economy:

"I think it's a little early to jump on it. I mean for me personally I'm not making any big decisions or changes yet," says consumer Kristen Knauff.

And that may be wise with home heating costs predicted to go through the roof this winter.

"These higher energy prices are one big weight on an already fragile economy. It could be the difference between an economy that is growing and one that is not," says Mark Zandi of

Bottom line: Analysts say it's still too early to tell if the worst is behind us.

ABC's Carla Wohl reports.