A new survey of thousands of U.S. consumers by Inman and Dig Insights suggests that many homebuyers are spurred to enter an unaffordable market by the assumption that things can only get worse.
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Many consumers expect home prices and mortgage rates to rise, and it’s a key factor drawing buyers to a generally unaffordable housing market, an Intel survey reveals.
Whether that’s a safe assumption for real estate clients to hold is a different question altogether.
A survey of 2,999 working U.S. adults conducted in early July shows that more consumers expect that homes will only become less affordable, even as policymakers eye rate cuts and price pressure weakens amid the nation’s cooling inventory of homes for sale.
What’s more, the Inman-Dig Insights consumer survey also surfaced evidence that these assumptions are meaningful factors driving people to the market today as buyers adjust to the idea of higher rates.
In this week’s report, Intel takes a deep look at how consumer outlook toward housing and personal finances has shifted in recent months, including through the tariff-induced whiplash of April and beyond.
A growing consensus
Even when consumer sentiment doesn’t line up with hard economic numbers, it often holds weight.
Consumer expectations that inflation will ramp up, for example, are viewed as a real obstacle for policymakers even when the actual numbers look fine on their own. And this makes sense, as the consumers themselves will be making the very decisions that add up to broad economic trends in the future.
The Inman-Dig Insights consumer survey aims to track similar measures of housing sentiment on a quarterly basis.
And employed U.S. adults under the age of 65 have a clear consensus that is only building as time goes on.
- 57 percent of working U.S. adults now expect home prices to rise over the coming year, compared to only 16 percent who expect them to fall.
- That’s up from the 50 percent in January who expected home prices to increase, vs. 19 percent who thought they were set to fall.
This expectation that prices will only continue to rise appears to be persuading more consumers that it’s a decent time to buy a house, in spite of the significant affordability challenges that are giving them pause.
- 42 percent of consumers surveyed now say it’s a good time to buy. It’s a slight uptick from 40 percent in January, and a significantly higher share than the 31 percent who said the same in July of last year.
Among those who said it’s a good time to buy, most said the expectation that prices will continue to rise informed their opinion.
- 56 percent of consumers in July who said that it’s a good time to buy a home named “home values will go up” as a key reason why, up from 52 percent at the start of the year.
- 38 percent of consumers in July who said it’s a good time to buy said that mortgage rates were still favorable historically, and that this contributed to their assessment.
But for most, the near-term outlook remains grim for housing.
- For the 58 percent of consumers who still say it’s a bad time to buy a home, large majorities said that home prices were simply too unaffordable, and mortgage rates too high, for a home purchase to make sense in this market.
These results help deepen the understanding of what’s driving buyers to market. But as affordability and shifts in inventory weaken upward price pressure on homes, it remains to be seen whether today’s buyers will end up regretting their timing.
A tariff scare?
The July survey also showed a significant bounceback in consumer sentiment following April’s survey, suggesting that some of the concerns at the height of the tariff news cycle may have been a temporary blip.
- 40 percent of working U.S. adults surveyed in July said that their household was better off financially than it was a year ago, compared to only 34 percent who said the same in April.
- 46 percent of the same group said that they were in a good enough financial position to purchase a home, up from 41 percent three months earlier.
- In April, the share of working U.S. adults who believed they would be in a good enough financial position to purchase a house a year from now dropped from 48 percent to 41 percent, before bouncing back to 47 percent in July.
These attitudes toward personal finance and homebuying ability roughly track with sentiment in financial markets over the same time.
Company valuations fell significantly in April following the Trump administration’s announcement of a new series of higher tariff rates on imported goods. Since then, however, markets have largely recouped those losses.
As the actual impact of tariffs continues to come into focus, Intel will continue to monitor its effect on brokerages and their clients.
About the Inman-Dig Insights Consumer Survey
The Inman-Dig Insights consumer survey was conducted from July 7 through July 8 to gauge the opinions and behaviors of Americans related to homebuying.
The survey sampled a diverse group of 2,999 American adults, who ranged in age from 24 to 65 and were employed either full-time or part-time. The participants were selected to produce a broadly representative breakdown by age, gender and region.
Statistical rigor was maintained throughout the study, and the results should be largely representative of attitudes held by U.S. adults with full- or part-time jobs. Both Inman and Dig Insights are majority-owned by Toronto-based Beringer Capital.
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