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 September, the HPSI held at 71.4 month-over-month and declined from 73.9 year-over-year.

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 September 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 94.2 in September from 97.8 in August.

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 125.4 from 132.4 in August, while the Expectations Index decreased to 73.4 from 74.7. According to The Conference Board, the Expectations Index falling below 80 typically serves as a leading indicator for a recession.

“The present situation component registered its largest drop in a year,” said Stephanie Guichard, senior economist at The Conference Board. “Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low. This is consistent with the decline in job openings. Expectations also weakened in September, but to a lesser extent. Consumers were a bit more pessimistic about future job availability and future business conditions but optimism about future income increased, mitigating the overall decline in the Expectations Index.”

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 55.1 in September. That fell from 58.2 in August and 70.1 in September 2024.

The index bifurcates into two sub categories: current economic conditions and expectations. The current index reached 60.4 in September, down from 61.7month-over-month and 63.3 year-over-year. The expectations index went to 51.7 from 55.9 and 74.4, respectively.

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.