Right now, the U.S. economy feels like a rollercoaster. Consumers are growing anxious, and it’s showing in the data. Consumer confidence has dropped sharply, marking the biggest decline since 2021. Meanwhile, the housing market remains strong, but with some unexpected twists.
Despite rising uncertainty, home prices continue to climb—but not everywhere. Some states are booming, while others are cooling off. What does this all mean for homebuyers, mortgage rates, and the economy? Let’s break it down.
Why Consumers Are Losing Confidence
If you’ve been feeling uneasy about the economy, you’re not alone. Consumer confidence is sinking, and experts say it’s due to a mix of economic concerns:
1. Inflation Is Still Squeezing Budgets
Everyday expenses—groceries, gas, and rent—remain high, forcing people to cut back on spending. Although inflation has slowed in some areas, it hasn’t dropped enough to ease financial strain.
2. Borrowing Costs Keep Rising
Big purchases, like cars, appliances, and homes, have become much less affordable. Higher mortgage rates and loan costs are making it harder for buyers to qualify for financing.
3. Job Security Concerns Are Growing
People are starting to worry about layoffs. If job stability becomes an issue, fewer buyers will feel comfortable taking on new mortgage debt.
Why This Matters: When people lose confidence, they spend less. That includes holding off on major financial commitments—like buying a home.
Stay informed on how economic trends impact homebuying in our Mortgage Knowledge Hub.
Housing Market: Still Hot, But Uneven
Despite low consumer confidence, the housing market hasn’t slowed down everywhere. Instead, it’s becoming more uneven across the country.
1. Home Prices Are Still Climbing
According to recent data, home prices have increased over the past year. However, the growth isn’t equal across all states.
Some states are seeing price surges, keeping home affordability low. Others are experiencing a slowdown or slight declines, giving buyers better opportunities.
2. Local Markets Vary Dramatically
Even within the same state, some cities have bidding wars, while others see price reductions. This regional imbalance makes it harder to predict the market’s next move.
What This Means for Buyers:
If you’re house-hunting in hot markets, expect higher borrowing costs.
If you’re looking in slower markets, you might have more negotiating power.
Not sure how much you can afford? Use our Loan Affordability Calculator to estimate your budget.
What’s Next? The Fed’s Decision Will Be Key
With economic uncertainty growing, all eyes are on the Federal Reserve. Many are wondering:
Will the Fed lower interest rates? If they do, borrowing costs could drop, boosting mortgage demand.
Will they keep rates high? If inflation remains stubborn, the Fed may delay rate cuts, keeping mortgage rates elevated.
Right now, investors and homebuyers are waiting for the next inflation report. If inflation cools down, confidence may improve, boosting both spending and home sales. However, if inflation remains high, the market could see continued volatility.
Thinking about refinancing before rates change? Use our Refinance Calculator to see what ay be best for you.
What This Means for Homebuyers & Homeowners
The current economic uncertainty presents both risks and opportunities for buyers, homeowners, and investors.
For Homebuyers:
- Be prepared for higher borrowing costs in competitive markets.
- If you’re in a cooling market, negotiate price reductions.
- Keep an eye on the Fed’s next moves—they’ll impact mortgage rates.
Compare mortgage options using our Loan Compass Tool.
For Homeowners:
- If you plan to sell, price your home competitively based on local demand.
- If mortgage rates drop, refinancing could lower your payments.
Check your refinancing options with our Refinance Calculator.
For Investors & Sellers:
- In some areas, demand remains high, so selling now may be smart.
- If the market slows, holding onto property may be the better move.
The Bottom Line
Right now, the economy is in a period of uncertainty. Consumer confidence is low, but home prices remain high—depending on where you look.
- Rising inflation and borrowing costs are making people hesitant to spend.
- Home prices are still climbing, but not in every state or city.
- The Fed’s next move on interest rates will determine where the market goes next.
What should you do? Stay informed, compare mortgage options, and watch economic trends closely. Whether you’re buying, selling, or refinancing, being proactive is key.
Find the best mortgage deals with our Loan Compass Tool and Loan Affordability Calculator.
