Consumer confidence dipped this month as the impacts of tariffs continue to weigh on the minds of everyday Americans, according to preliminary results of the latest University of Michigan survey of consumers released Friday.
But most Americans think mortgage rates and home prices will come down in the next 12 months — or at least not go up — according to mortgage giant Fannie Mae’s National Housing Survey.
The University of Michigan’s Index of Consumer Sentiment dropped nearly three points from August to September, to 55.4, and is down 21 percent from a year ago.
“Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation,” Surveys of Consumers Director Joanne Hsu said in a statement.
UofM Index of Consumer Sentiment
Consumers were less optimistic about their current and expected personal finances, which both slipped about 8 percent.
Joanne Hsu
“Trade policy remains highly salient to consumers, with about 60 percent of consumers providing unprompted comments about tariffs during interviews, little changed from last month,” Hsu said. “Still, sentiment remains above April and May 2025 readings, immediately after the initial announcement of reciprocal tariffs.”
Another closely watched gauge of sentiment, The Conference Board Consumer Confidence Index, fell by 1.3 points in August.
The Conference Board’s Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, fell by 1.2 points to 74.8.
When the Expectations Index has fallen below 80 in the past, a recession often follows.
If there’s a silver lining for the real estate industry, it’s that slower hiring and increased layoffs mean the Federal Reserve is expected to slash short-term interest rates several times this year and next even as tariffs fuel inflation. Mortgage rates have already come down by a one-half of a percentage point since the end of July in anticipation of Fed easing.
Fannie Mae’s National Housing Survey, released Sept. 8, showed Americans were more worried about losing their jobs in August but increasingly optimistic that mortgage rates and home prices have room to come down.
As a result, the percentage of consumers who said it was a good time to buy rose five percentage points from July to August, tying the previous high for the year.
Source: Fannie Mae National Housing Survey, August, 2025.
While just 28 percent of the 1,122 household financial decision makers surveyed in August said it was a good time to buy a home, that’s up from 23 percent in July and 17 percent a year ago.
The percentage saying it was a good time to buy hit an all-time low of 14 percent in May 2024, when mortgage rates were still hovering at around 7 percent.
Source: Fannie Mae National Housing Survey, August, 2025.
With inventories rising in some regions and listings spending more days on the market (see data in your market), 41 percent said August was a bad time to be selling a home, up from 39 percent in July and 34 percent a year ago.
Mortgage rates were hovering around 6.6 percent when the survey was conducted from Aug. 1 through Aug. 20.
Since then, rates on 30-year fixed-rate mortgages tracked by Optimal Blue have descended to a 2025 low of 6.25 percent on Thursday, on expectations that the cooling economy will prompt the Fed to start cutting rates on Sept. 17.
Samir Dedhia
“As economic indicators like job growth slow and inflation cools, investor sentiment continues to shift in favor of easing monetary policy,” One Real Mortgage CEO Samir Dedhia said, in a statement. “That optimism is being matched by buyer activity.”
Mortgage applications climbed to the highest level since 2022 last week, with purchase loan demand up 23 percent from a year ago, the Mortgage Bankers Association reported Wednesday.
Dedhia said One Real Mortgage is seeing more applications for 20-year fixed-rate mortgages, which offer lower interest rates than 30-year loans and more affordable monthly payments than 15-year loans.
“These are clear signs that people are responding to rate movement and seeing real opportunities in the current environment,” Dedhia said.
Source: Fannie Mae National Housing Survey, August, 2025.
Only 26 percent of Americans polled by Fannie Mae in August said they expect mortgage rates to go up in the next 12 months, the lowest reading of the year. With 33 percent saying they expect rates to come down and 41 percent expecting them to stay where they are, the net share expecting rates will go down climbed to 7 percent — the first positive reading since January.
Source: Fannie Mae National Housing Survey, August, 2025.
Similarly, most Americans polled in August thought home prices will go down (22 percent) or stay the same (38 percent) over the next 12 months.
With the share of consumers expecting home prices to go up falling to 40 percent, the net share expecting home prices to go up in the next year dropped by 10 percentage points, to 18 percent.
Source: Fannie Mae National Housing Survey, August, 2025.
The Fannie Mae Home Purchase Sentiment Index (HPSI), which distills six questions from the National Housing Survey into a single measure of consumer sentiment, fell 0.4 points from July to August, to 71.4.
The HPSI plunged during the pandemic and then hit an all-time low of 56.7 in October 2022 as mortgage rates soared. The HPSI gradually climbed back to register a post-pandemic high of 75 in November 2024.
The HPSI treats expectations that home prices will go up as a positive, since it reflects consumer confidence that the housing market is not in a bubble.
But affordability issues created by the surge in both home prices and mortgage rates have kept many would-be homebuyers on the sidelines.
Four out of six HPSI components decreased in August — home price outlook, selling conditions, job loss concern, and change in household income.
The net share of working Americans who said they were not concerned about losing their job decreased five percentage points in August, to 45 percent.
The net share who said their household income was significantly higher than a year ago decreased three percentage points, to 5 percent.
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