Home Buyer and Consumer Optimism Fade in the Fall

Optimism declines in fall

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

However, affordability remains a hurdle, while economic uncertainty and tariff pressures pervade daily life. As a result, confidence among home buyers and consumers deteriorated.

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 September, the HPSI held at 71.4 month-over-month and declined from 73.9 year-over-year.

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 September 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, dropped to 88.7 in November from an 95.5 in October.

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 fell to 126.9 from 131.2 in October, while the Expectations Index also declined to 63.2 from 71.8. According to The Conference Board, the Expectations Index falling below 80 typically serves as a leading indicator for a recession.

“All five components of the overall index flagged or remained weak. Consumers were less sanguine about current business and labor market conditions,” said Dana Peterson, chief economist at The Conference Board.

“The labor market differential—the share of consumers who say jobs are ‘plentiful’ minus the share saying ‘hard to get’—dipped again in November. Consumers were notably more pessimistic about business conditions six months from now. Mid-2026 expectations for labor market conditions remained decidedly negative, and expectations for increased household incomes shrunk dramatically, after six months of strongly positive readings.”

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 51 in November. That fell from 53.6 in October and 71.8 the year prior. The score decreased for a third-straight month.

The index bifurcates into two sub categories: current economic conditions and expectations. The current index reached 51.1 in November, down from 58.6 month-over-month and 63.9 year-over-year. The expectations index went to 51 from 50.3 and 76.9, respectively.

“After the federal shutdown ended, sentiment lifted slightly from its mid-month reading. However, consumers remain frustrated about the persistence of high prices and weakening incomes,” said Joanne Hsu, surveys of consumers director at the U of M. “Consumers continue to report that their personal finances now are weighed down by the present state of high prices.”

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.