Home Buyer and Consumer Optimism Fade in March and April

Pessimism grows this Spring

Borrower conditions are improving and recent data showed home buyers gained negotiating leverage.

But mortgage rates and home prices remain stubbornly high. Combine that with growing economic uncertainty and tariff pressures, and home buyer confidence in March.

See what the prevailing home buyer and consumer sentiments are with the current economy and what's causing concern.

How are home buyers feeling?

The general consensus among house hunters helps shape market competition.

More demand — especially when for-sale inventory is low — can create frenzied bidding wars and accelerate home price growth. Then, the pendulum could swing the other way. Worsening home buyer conditions may give borrowers a chance at a comparatively good deal on a property.

Through a consumer survey, Fannie Mae’s Home Purchase Sentiment Index (HPSI) evaluates the overall view and outlook of the housing market. The index launched in 2011 and runs on a scale of zero to 100. It reached a high of 93.8 in August 2019 and a low of 56.7 in October 2022.

In March, the HPSI fell to 68.1, down from 71.6 month-over-month and 71.9 year-over-year. It marked the second annual decline since April 2023 — and second in a row — driven by diminishing job security.

The table below shows the overall HPSI scores from the last 12 months:

The HPSI components

The overall index dissects into six components: Good time to buy, good time to sell, home price expectations, mortgage rate expectations, job loss concern, and household income.

Below is the breakdown of each measure for March 2025:

How are consumers feeling?

Additionally, two monthly reports — The Conference Board's Consumer Confidence Index (CCI) and the University of Michigan's Survey of Consumers — gives a broader view on people's attitudes with employment, spending, and economic outlook.

The Conference Board's Consumer Confidence Index

The CCI, with a baseline of 100, hit a score of 86 in April. That fell from 93.9 in March and 97 in April 2024. It marked the fifth-straight month-over-month decrease and the index's lowest point since 85.9 in May 2020.

The CCI comprises two sub indexes covering income, business and labor; one based on current circumstances and one on short-term, six-month outlooks.

The Present Situation Index declined to 133.5 from 134.4 in March, while the Expectations Index dropped to 54.4 — the lowest score since October 2011 — from 66.9. According to The Conference Board, the Expectations Index falling below 80 typically serves as the canary in the coalmine for a recession.

“Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the Covid pandemic,” said Stephanie Guichard, senior economist at The Conference Board.

“The decline was largely driven by consumers’ expectations. The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future. Notably, the share of consumers expecting fewer jobs in the next six months (32.1%) was nearly as high as in April 2009, in the middle of the Great Recession. In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations. However, consumers’ views of the present have held up, containing the overall decline in the Index.”

The CCI components

The overall CCI breaks down into five measurables: Current business conditions, current labor market, expected business conditions, expected labor market, and income prospects.

The table below shows the month-to-month shifts in consumer confidence levels for the five CCI components. Expected and prospective conditions are based on the next six months.

University of Michigan's Survey of Consumers

The consumer sentiment index also has a baseline score of 100 and hit 52.2 in April. That fell from 57 in March and 77.2 in April 2024. It marked the fourth-straight monthly decline and the survey's lowest point since 50 in June 2022.

The index bifurcates into two sub categories: current economic conditions and expectations. The current index reached 59.8 in April, dropping from 63.8 month-over-month and 79 year-over-year. The expectations index went to 47.3, falling from 52.6 and 76, respectively.

"Expectations have fallen a precipitous 32% since January, the steepest three-month percentage decline seen since the 1990 recession," said Joanne Hsu, director of surveys at U of M. "While this month’s deterioration was particularly strong for middle-income families, expectations worsened for vast swaths of the population across age, education, income, and political affiliation.

"Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead. Labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warnings signs perceived by consumers."

The survey components

The table below shows the monthly and annual changes to the University of Michigan's consumer sentiment survey, plus its two components.

The bottom line for home buyers

Good or bad home buying conditions, experts will tell you that trying to time the market right rarely works. They also tend to advise that the best time to buy is when you find a property you can afford.

So get ahead of competition and do all the prep work before applying for a mortgage. If you need to beef up your financial profile, you can try to raise your credit score and qualify for down payment assistance programs.

If you’re ready to start your homeownership journey, reach out to a local loan officer today.