Home Buyer and Consumer Optimism Hit June Gloom

Pessimism grows this Summer

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 fell in June.

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 June, the HPSI fell to 68.1, down from 73.5 month-over-month and 72.6 year-over-year. It marked the fourth annual decline since April 2023, driven by diminishing job security. While unstable conditions can make buying property a difficult decision, they also likely lessen competition in the marketplace.

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 June 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, fell to a score of 93 in June from 98.4 in May.

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 129.1 from 134.5 in May, while the Expectations Index dropped to 69 from 73.6. According to The Conference Board, the Expectations Index falling below 80 typically serves as the canary in the coalmine for a recession.

“Consumer confidence weakened in June, erasing almost half of May’s sharp gains,” said Stephanie Guichard, senior economist at The Conference Board.

“The decline was broad-based across components, with consumers’ assessments of the present situation and their expectations for the future both contributing to the deterioration. Consumers were less positive about current business conditions than May. Their appraisal of current job availability weakened for the sixth consecutive month but remained in positive territory, in line with the still-solid labor market. The three components of the Expectations Index—business conditions, employment prospects, and future income—all weakened. Consumers were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded slightly.”

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 60.7 in June. That grew from 52.2 in May but dropped from 68.2 in June 2024.

The index bifurcates into two sub categories: current economic conditions and expectations. The current index reached 64.8 in June, similarly up from 58.9 month-over-month and down from 65.9 year-over-year. The expectations index went to 58.1 from 47.9 and 69.6, respectively.

“Despite June’s gains, sentiment remains about 18% below December 2024, right after the election; consumer views are still broadly consistent with an economic slowdown and an increase in inflation to come,” said Joanne Hsu, director of surveys at U of M. “Consumers continue to be concerned about the potential impact of tariffs, but at this time they do not appear to be connecting developments in the Middle East with the economy.”

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.