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Recent surveys by Fannie Mae and the University of Michigan suggest that consumers are growing concerned about inflation, with many believing that home prices, rents, and mortgage rates will rise in the coming year.
These inflation fears spiked after President Donald Trump announced tariffs on goods from China, Canada, and Mexico on Jan. 31, according to the University of Michigan’s Surveys of Consumers.
Joanne Hsu
Survey director Joanne Hsu noted that consumer sentiment dropped significantly after the tariff announcement, with sentiment declines seen across various demographics.
The National Association of Home Builders has also expressed concerns about the impact of tariffs on imported materials like lumber and gypsum.
Fannie Mae’s National Housing Survey, conducted before the tariff announcements, also revealed consumer worries about housing affordability amid inflation concerns.
Kim Betancourt
Fannie Mae researcher Kim Betancourt highlighted growing consumer pessimism regarding housing affordability and expectations of price increases in the housing market.
The University of Michigan’s Index of Consumer Sentiment also declined, with inflation expectations rising significantly in response to tariff concerns.
The housing markets that saw annual home price declines in 2024 included Austin, Texas (-2.9 percent); Tampa, Florida (-2 percent); San Antonio, Texas (-1.5 percent); and Jacksonville, Florida (-1.1 percent), according to the ICE Mortgage Monitor report for February. Florida’s nine largest markets experienced price declines, with Miami being the only exception.
The report highlighted that slower migration into the state, rising insurance costs, and increasing for-sale inventories are factors to watch closely for home prices in Florida in 2025. The ICE Mortgage Monitor also identified 18 of the 20 strongest housing markets for price appreciation in “inventory-starved” parts of the Midwest and Northeast.
On the rental side, consumer expectations for rent price increases have sharply risen over the past two months. The report noted that while it is generally cheaper to rent than buy in most U.S. metros, affordability issues will continue to pose challenges for both renters and homeowners.
Elevated mortgage rates have further added to affordability challenges for potential homebuyers, with rates on 30-year fixed-rate conforming mortgages surpassing 7 percent in January for the first time since May 2024. Mortgage industry economists predict that these elevated rates will persist throughout the year, potentially hindering relief for housing affordability and home sales activity.
Despite the challenges, Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased slightly in January to 73.4, up 2.7 points from the same time last year. However, the survey found that 78 percent of Americans believe it is currently a bad time to buy a home, while 63 percent feel it is a good time to sell. To subscribe, please click the link below:
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