Home Buyer and Consumer Optimism Fade in August

Optimism fades at end of summer

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

Although affordability remains a hurdle while economic uncertainty and tariff pressures pervade daily life, home buyer confidence declined in August.

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 August, the HPSI dipped to 71.4 from 71.8 month-over-month and 72.1 year-over-year. Heightened job loss concerns and home price outlooks drove the index decline.

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 August 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 97.4 in August from 98.7 in July.

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 131.2 from 132.8 in July, while the Expectations Index decreased to 74.8 from 76. According to The Conference Board, the Expectations Index falling below 80 typically serves as a leading indicator for a recession.

“Notably, consumers’ appraisal of current job availability declined for the eighth consecutive month, but stronger views of current business conditions mitigated the retreat in the Present Situation Index,” said Stephanie Guichard, senior economist at The Conference Board. “Meanwhile, pessimism about future job availability inched up and optimism about future income faded slightly. However, these were partly offset by stronger expectations for future business conditions.”

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 58.2 in August. That fell from 61.7 in July and 67.9 in August 2024.

The index bifurcates into two sub categories: current economic conditions and expectations. The current index reached 61.7 in August, down from 68 month-over-month but up from 61.3 year-over-year. The expectations index went to 55.9 from 57.7 and 72.1, respectively.

“This month’s decrease was visible across groups by age, income, and stock wealth. Moreover, perceptions of many aspects of the economy slipped. Buying conditions for durable goods subsided to their lowest reading in a year, and current personal finances declined 7%, both due to heightened concerns about high prices. Expectations for business conditions and labor markets contracted in August as well,” said Joanne Hsu, director of surveys at U of M.

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.