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Consumer Confidence Dropped to Lowest since Tariffs Introduced – Eye On Housing

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Consumer confidence in December fell to the lowest level since April’s tariff implementation, reflective of growing concerns about reignited inflation and a weakening labor market affecting personal finances. The labor market differential, which measures the gap between consumers viewing job as plentiful and hard-to-get, continued to narrow and is now at its lowest level since February 2021. This is consistent with recent job reports showing fewer job openings and slower hiring. The decline in confidence stands in contrast to the recent solid GDP report for the third quarter.

The Consumer Confidence Index, reported by the Conference Board, is a survey measuring how optimistic or pessimistic consumers feel about their financial situation. This index fell from 92.9 to 89.1 in December, the lowest level since April. The Consumer Confidence Index consists of two components: how consumers feel about their present situation and their expected situation. In September, the Present Situation Index decreased 9.5 points from 126.3 to 116.8, the largest monthly decline since September 2024; the Expectation Situation Index dropped remained unchanged at 70.7. This is the eleventh consecutive month that the Expectation Index has been below 80, a threshold that often signals a recession within a year.

Consumers’ assessment of current business conditions deteriorated in December. The share of respondents rating business conditions “good” decreased by 2.3 percentage points to 18.7%, while those claiming business conditions as “bad” rose by 3.3 percentage points to 19.1%. Meanwhile, consumers’ assessments of the labor market cooled further in December. The share of respondents reporting that jobs were “plentiful” fell by 1.5 percentage points to 26.7%, the lowest level since March 2021; meanwhile, those who saw jobs as “hard to get” rose by 0.7 percentage points to 20.8%, the highest since February 2021.

Consumers were more pessimistic about the short-term outlook. The share of respondents expecting business conditions to improve fell from 18.1% to 18.0%, while those expecting business conditions to deteriorate declined from 25.1% to 21.8%. Similarly, expectations of employment over the next six months were more negative. The share of respondents expecting “more jobs” remained unchanged at 16.5%, and those anticipating “fewer jobs” rose by 0.6 percentage points to 27.4%.

The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home fell slightly to 5.7% in December, the lowest level since August. Of those, respondents planning to buy a newly constructed home fell to 0.5%, and those planning to buy an existing home was unchanged at 2.4%. The remaining 2.8% were planning to buy a home but were undecided between new or existing homes.



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Mortgage Rates End 2025 at the Lowest Level of the Year – Eye On Housing

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Long-term mortgage rates have been declining since mid- 2025 and ended the year at their lowest level since September 2024. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.19% in December, 5 basis points (bps) lower than November. Meanwhile, the 15-year rate declined 3 bps to 5.48%. Compared to a year ago, the 30-year rate is lower by about half a percentage point, or 53 basis points (bps). The 15-year rate is also lower by 45 bps.

The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.12% in December – a modest increase of 2 bps from the previous month. Given forward-looking markets, the 10-year Treasury yield declined during the week preceding the Federal Reserve’s third rate cut of the year. However, compared to the prior month, yields ended slightly higher, rising 2 bps, as labor market data released shortly thereafter pointed to slowing job gains and rising unemployment rate.

Falling lower mortgage rates have started to translate into gains as existing home sales edged up slightly in November. However, this increase remains limited as mortgage rates above 6% are still considered elevated. Nonetheless, as financing costs continue decline, more households are likely to reenter the housing market. An NAHB analysis shows that a 25 bps reduction in the 30-year mortgage rate, from 6.25% to 6.00%, could bring approximately 1.1 million additional households back into the buyer pool.

NAHB expects the 30-year mortgage rate to average 6.17% in 2026 and would reach 6% by 2027.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Lowest Mortgage Rates in Over a Year in October  – Eye On Housing

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Average mortgage rates in October trended downward to the lowest rates in over a year. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.25% in October, 10 basis points (bps) lower than September. Meanwhile, the 15-year rate declined just 1 bp to 5.49%. Both the 30-year and 15-year rates remain lower than a year ago, dropping by 17 bps and 11 bps year-over-year, respectively.  

The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.09% in October – a 5-basis point decrease from the previous month. Markets priced in rate cuts from the Fed at the start of the month, resulting in relatively unchanged rates following the announcement of a 25 bps cut to the federal funds rate on October 29th. 

Falling mortgage rates have shown some small impacts on housing activity. According to the latest Mortgage Bankers Association (MBA) report, mortgage application activity strengthened, with refinancing applications rising and purchase applications also increasing. Additionally, existing home sales rose to a seven-month high in September. There is no data available for new home sales in September due to the government shutdown. 

Looking forward, the industry faces a bifurcated market characterized by a weakening job market and elevated inflation. Additionally, there are wildcard factors such as the upcoming Supreme Court case regarding the legality of recent tariffs and lack of economic data. As a result, the vote at the December Fed meeting will be difficult to predict.  

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A Warning Sign: Homeownership Rate Declines to Lowest Level Since 2019

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The latest homeownership rate declined to 65% in the second quarter of 2025, marking its lowest level since late 2019, according to the Census’s Housing Vacancy Survey (HVS). With mortgage interest rates remaining elevated and housing supply still tight, housing affordability is at a multidecade low. Compared to the peak of 69.2% in 2004, the homeownership rate is currently 4.2 percentage points lower and remains below the 25-year average rate of 66.3%.

Compared to the previous quarter, the homeownership rate dropped by 0.1 percentage point.[OD1]  Additionally, homeownership rates dropped amongst almost all age groups. Householders aged 45-54 experienced the largest drop, declining by 1.9 percentage points from 71.1% to 69.2%. The 35-44 age group saw a 1.2 percentage point decrease, decreasing from 62.2% to 61%. Among younger households, the homeownership rate for those under 35 dropped 1percentage points to 36.4% in the second quarter of 2025, hovering near the lowest rate in the last 6 years. This age group, particularly sensitive to mortgage rates and the inventory of entry-level homes. However, homeownership rates for householders aged 55-64 and 65 years and over stayed unchanged from a year ago.

The national rental vacancy rate inched down to 7% for the second quarter of 2025, after steadily increasing since 2021. Meanwhile, the homeowner vacancy rate stayed at 1.1%, remaining near the survey’s 67-year low of 0.7%.

The housing stock-based HVS revealed that the count of total households increased to 132.5 million in the second quarter of 2025 from 131.3 million a year ago. This increase was driven entirely by renter household growth, which added 1.2 million new households. Meanwhile, the number of owner-occupied households declined by 39,000 over the same period.

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Builder Sentiment at Third Lowest Reading Since 2012

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In a further sign of declining builder sentiment, the use of price incentives increased sharply in June as the housing market continues to soften.

Builder confidence in the market for newly built single-family homes was 32 in June, down two points from May, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The index has only posted a lower reading twice since 2012 – in December 2022 when it hit 31 and in April 2020 at the start of the pandemic when it plunged more than 40 points to 30.

Buyers have increasingly moved to the sidelines due to elevated mortgage rates and tariff and economic uncertainty. Consequently, the latest HMI survey revealed that 37% of builders reported cutting prices in June, the highest percentage since NAHB began tracking this figure on a monthly basis in 2022. This compares with 34% of builders who reported cutting prices in May and 29% in April. Meanwhile, the average price reduction was 5% in June, the same as it’s been every month since last November. The use of sales incentives was 62% in June, up one percentage point from May.

Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets. Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.

Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three of the major HMI indices posted losses in June. The HMI index gauging current sales conditions fell two points in June to a level of 35, the component measuring sales expectations in the next six months dropped two points lower to 40 while the gauge charting traffic of prospective buyers posted a two-point decline to 21, the lowest reading since November 2023.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 43, the Midwest moved one point higher to 41, the South dropped three points to 33 and the West declined four points to 28. HMI tables can be found at nahb.org/hmi.

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Lowest Homeownership Rate for Younger Householders in Four Years

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The U.S. homeownership rate was 65.6% in the second quarter of 2024, unchanged from the first quarter of 2024, according to the Census’s Housing Vacancies and Homeownership Survey (HVS). However, this marks the lowest rate in the last two years. The homeownership rate is below the 25-year average rate of 66.4%, due to a multidecade low for housing affordability conditions.

The homeownership rate for the head of households (householders) under the age of 35 decreased to 37.4% in the second quarter of 2024. Amidst elevated mortgage interest rates and tight housing supply, affordability is declining for first-time homebuyers. This age group, who are particularly sensitive to mortgage rates, home prices, and the inventory of entry-level homes, saw the largest decline among all age categories.

The national rental vacancy rate stayed at 6.6% for the second quarter of 2024, and the homeowner vacancy rate inched up to 0.9%. The homeowner vacancy rate is still hovering near the lowest rate in the survey’s 67-year history (0.7%).

The homeownership rates for householders under 35, between 35 and 44, and 65 and over decreased compared to a year ago. The homeownership rates among householders under 35 experienced a 1.1 percentage point decrease from 38.5% to 37.4%. Followed by the 35-44 age group with a 0.9 percentage point decrease from 63.1% to 62.2%. Next, were households with ages 65 years and over, who experienced a modest 0.3 percentage point decline. However, homeownership rates for the 45-54 age group inched up to 71.1% in the second quarter of 2024 from 70.8% a year ago. The homeownership rate of 55-64 year olds edged up to 75.8% from a year ago.

The housing stock-based HVS revealed that the count of total households increased to 131.4 million in the second quarter of 2024 from 130 million a year ago. The gains are largely due to gains in both renter household formation (855,000 increase), and owner-occupied households (515,000 increase).

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