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Consumers are once again feeling uneasy about inflation, and we are confident that home prices, rent and mortgage rates are heading towards this year as the numbers are increasing.
Inflation expectations surged after President Donald Trump announced on January 31 that he planned to impose tariffs on goods from the University of Michigan consumer survey from China, Canada and Mexico.
Joanne Hsu
“Consumer sentiment has declined for the second straight month, dropping by about 5% to reach its lowest reading since July 2024,” Research Director Joanne HSU said in a statement Friday. “This decline is prevalent, with Republicans, Independents and Democrats all promoting all the drop in sentiment since January, along with consumers from the age and wealth group.”
A 10% tariff on Chinese goods came into effect Tuesday, but the administration proposed a 25% tariff on goods from Canada and Mexico on hold for 30 days.
The National Association of Home Builders said that more than 70% of imported coniferous wood and plaster are from Canada and Mexico, where more than 70% of the imported conifer wood and plaster is used for drywall, and if the proposed 25% tariff is added, the home builder would be warns that it faces a 40% obligation for Canadian wood. Existing obligations.
Fannie Mae’s Monthly National Housing Survey – concluded on January 21st before the proposed tariffs were announced, but consumers are worried that inflation will exacerbate housing affordability I understand.
Kim Bae-Tangkot
“Consumers are increasingly pessimistic about housing affordability conditions being improved across the board as they expect home prices, rent and mortgage fees to all rise.”
All five components of the University of Michigan Consumer Feeling Index have fallen, dropping the index by 4.6% since January and 11.8% from a year ago.
Consumer inflation expectations surge against tariff concerns
Source: University of Michigan Consumer Survey.
“One year inflation expectations rose from 3.3% this month to 4.3% this month, the highest reading since November 2023, and an unusually large increase in two months,” HSU said. . “This is the fifth and fifth time in 14 years, and we’ve seen such a big month’s rise (over 1 percent point) in our inflation forecast a year ago.”
Consumer sentiment fell between January and February for both Republicans and Democrats, but overall trust since the election has been “dramatic partisan divisions,” making Democrats more pessimistic than Republicans. There was, said Oliver Allen, senior US economist at Pantheon Macroeconomics.
Oliver Allen
“While politically driven sentiment shaking tends to be inadequately correlated with spending decisions, trust among independents has returned significantly since December,” Allen said on Friday. This was mentioned in a note to clients.
The University of Michigan surveyed consumers from January 21 to February 3, and Trump announced a 30-day suspension of tariffs in Mexico and Canada on the last day of the investigation window, Allen noted.
“Consumers believe that consumers will continue to be raised pre-periodically as they try to preempt the high prices that tariffs are likely to bring,” Allen said.
Fannie Mae’s National Housing Survey has resulted in a slight increase in the mortgage giant’s Home Purchase Sentiment Index (HPSI).
This is because HPSI distills six questions from the survey into a single number, dealing with consumer expectations that home prices will rise as positive over the next 12 months. The expectation of a rise in home prices means that consumers are not worried about prices crashing. This is a sign of trust in the housing market.
Source: Fanny May National Housing Survey, January 2025.
However, the range of home prices during the pandemic has already excluded many home buyers from the market. Millions of Americans would welcome housing market conflicts, a survey of trees they rented last fall has been found.
Fannie Mae’s National Housing Survey reached 1,055 family finance decision-makers between January 2 and January 21, but 43% of Americans continue to see housing prices rise over the next 12 months. , and we believe it will continue to rise from 38% in December.
Last month, Fannie May’s economist estimated that national home prices rose 5.8% in 2024, and predicted an additional 3.5% in 2025. .
Among the 50 largest housing markets in the US, the market that recorded annual home prices decline in 2024 includes Austin, Texas (-2.9%). Tampa, Florida (-2%); According to the February Ice Mortgage Monitor report, there are San Antonio, Texas (-1.5%) and Jacksonville, Florida (-1.1%).
Eight of Florida’s nine biggest markets saw prices fall last year, with Miami being the only exception, the authors of the report said.
“Given the slower transition to the state, higher insurance costs and widening stock for sale, the value of homes in the state in the sun is worth watching midway through 2025,” the report said.
The Ice Mortgage monitor has identified 18 of the 20 strongest housing markets for price increases, located in the “stock-hungry” portions of the Midwest and Northeast.
“On the rental front, consumers have shown a significant increase in the last two months, indicating a rise in rental prices,” Betancourt said.
From December to January, consumers’ share, which is expected to increase by 8 percentage points, rose to 65%. He said the share of consumers who said they would buy a home if they had to move should increase to 68%.
“While consumers remain relatively cheap than they would buy in almost every US metropolitan area, the issue of affordability becomes a real challenge for both foreseeable future tenants and homeowners. I’m expecting it,” Betankort said.
Source: Fanny May National Housing Survey, January 2025.
The rise in mortgage rates adds to the affordability challenge. Not only home buyers who watch monthly payments, but many homeowners also feel reluctant to sell, feeling locked up in low prices on existing mortgages.
Following a 2024 low of 6.03% on September 17, rate lock data tracked in optimal blue, the 30-year fixed-rate fit mortgage rate reached 7% for the first time since May 2024. It rose above and beyond.
Mortgage industry economists expect mortgage rates to continue to rise for the rest of the year, with existing home sales likely to bounce back this year after reaching 30-year lows in 2024 I expect it to be slightly sexual.
“As the rate continued to rise and crossed the 7% threshold in mid-January, we were largely anticipated a decline in optimism over the mortgage outlook,” Bettencourt said. “As mentioned in our latest forecast, we currently expect the mortgage rate to close around 6.5% in 2025, which has not changed relatively from where we are today.
Source: Fanny May National Housing Survey, January 2025.
High home prices and a lack of stock in many markets, combined with rising mortgage rates, have said 78% of Americans voted by Fannie Mae in January that it was a bad time to buy a home. Ta.
That remains the same since December, but it has fallen from 83% a year ago, and in 2010, the 86% survey record registered in May 2024 was the highest ever.
Source: Fanny May National Housing Survey, January 2025.
Most Americans (63%) said January has not changed since December and is a good time to sell homes that have risen 3 percentage points a year ago. In April, 67% of those surveyed said it was a good time to buy a house.
Source: Fanny May National Housing Survey, January 2025.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose 0.3 points in January to 73.4. HPSI has risen 2.7 points compared to the same time last year.
There were few improvements in HPSI from December to January, but of the six factors tracked, it was the only component that had degraded mortgage rate outlook.
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