Consumer confidence has been rocky so far in 2025, with sentiment plunging again this week due to ongoing news of potential tariff and market volatility. How might these levels of confidence impact real estate purchasing behaviors, and can they be used as a measure of predictability for housing market performance?
Experts say there’s at least a perceived relationship between the two, but perhaps not one backed by research just yet.
“Interestingly, there is very little academic support for the correlation between consumer confidence and real estate sales activity,” Ken Johnson, Ph.D., Christie Kirkland Walker chair of real estate and professor of finance at The University of Mississippi, tells RISMedia. “Thus, at this point, there is little scientific support for what seems to be a given.”
The consumer confidence landscape
At the end of March, the Conference Board reported that consumer confidence fell by 7.2 points, to 92.9.
It also reported that its Expectations Index, which measures consumers’ short-term outlook for income, business and labor market conditions, dropped to its lowest level in 12 years (65.2). This is below the threshold of 80 that typically signals a recession is in sight.
On the chopping block are optimism levels related to future employment prospects, future business conditions and future income; levels for the latter held strong over the past few months before suddenly dropping off.
The gloomy outlook is driven primarily by consumers over the age of 55—and those between 35 and 55 to a slightly lesser extent. Confidence levels, however, are healthier for those under 35 and households earning more than $125,000 a year.
When it comes to big-ticket purchases, confidence in buying homes is down on a six-month basis, though appliance and electronic purchase interest ticked up—likely as a result of potential tariffs leading to price increases.
Economic outlook a key factor
Consumer confidence is generally a good indicator of consumers’ willingness to buy homes. For example, people are more likely to purchase a home when they are optimistic about the economy and their financial situation, says Selma Hepp, chief economist and SVP at Cotality, (formerly CoreLogic).
Faltering consumer confidence, however, can signal changes in household spending patterns, says Greg Willett, chief economist for LeaseLock.
“Whether or not households actually pull back on spending, uncertainty tends to make people put off major financial or lifestyle decisions. They simply freeze in place,” he adds. “This suggests that the number of home-buying prospects will be somewhat fewer than was perhaps anticipated a bit earlier.”
On the rental side, it could be seen as a benefit, with households with expiring leases choosing to remain in their current residences, he says.
Economic disruption isn’t necessarily a dam for purchasing activity though. Moreso, it delays decisions rather than pauses them, according to Fatima Malik, global real estate advisor with Engel & Völkers Beverly Hills.
During early COVID and in late 2022, for example, confidence levels were low, but people still moved as a result of life events like career shifts, family needs and retirement, she says.
“Consumer confidence influences timing, but it doesn’t eliminate demand. I’ve worked through enough market cycles to know—people will still move if they need to. The question becomes ‘when,’ not ‘if,’” says Malik.
Regional trends show outliers
It can be difficult to read into future real estate market activity using national confidence markers.
Market psychology plays an outsized role in home purchases, but New York City buyer sentiment or consumer confidence may vary wildly from the rest of the country, especially when 60%-plus deals are all cash, says Scott Harris, founder and associate broker of real estate firm Magnetic.
The premium price markets are less susceptible to market impact, he adds, speaking of the north of $3 million sector—a segment that never stopped buying even when rates went up.
It’s a similar story in Los Angeles, where Malik says buyers are coming back to the table with new strategies, not fear, as pending sales are up 2% nationally and the Case-Shiller Index shows 4.1% annual price growth.
There, cash-heavy buyers are not sidelined, she says—they’re watching for opportunities.
“First-time buyers, especially millennials and Gen Z, are using layered financing tools and shifting their search to areas with long-term potential,” according to Malik. “In LA, I see this playing out in areas like Highland Park, El Sereno and the Valley—communities with relative attainability and lifestyle value.”
This reflects a market that’s adjusting, not panicking, she says. “Rising inventory, steady price appreciation and long-term demographic demand point to a recalibrating market—not a collapsing one.”
Confidence as a supporting player
There are more reliable levers to pull for a read on housing market activity. Hepp points to days on market, share of home sales that are over or under asking price, months’ supply, number of offers on a listing, home price gains and mortgage rates as the more traditional metrics to watch.
“Ongoing inventory issues around the country have a greater influence on the housing market than consumer sentiment,” adds Johnson.
As there is bifurcation across housing markets, following trends that emerged in recent years, such as lack of affordability, surge in non-mortgage costs (such as property taxes and insurance), surge in inventories in some markets, etc., Hepp says some markets have been a little more resilient in light of policy and economic uncertainties.
For this reason, experts suggest looking at the whole picture, confidence levels included, when attempting to identify trends. Malik, for example, says she speaks with clients about more than just list prices and rates. Conversations should include review of inflation trends, credit impacts from resumed student loan payments and the real cost of waiting.
“This is when agents prove their value. Clients don’t need hype—they need clarity, structure and strategy,” she says.
Business adaptability best practices
Regardless of where the volatility lies, if consumer sentiment is low, agents and brokers can get ahead of business impact by implementing future-proof strategies.
For Harris, this means dialing back the day-to-day noise for clients and helping them focus on identifying what’s most important. Hepp says this should be placed on educating them about specific trends in their locations.
Johnson says expanding beyond residential real estate sales may be the key to navigating volatility. “Real estate practitioners should pursue a portfolio approach to their business by adding property management to their revenue streams. This will allow for a greater chance of riding out down-markets for practitioners.”
Willett suggests keeping an eye on job numbers across major industry categories if the country’s economic expansion pace does slow.
“For the past couple of years, we’ve already been seeing limited growth in high-wage job sectors like professional/business services, finance and information,” says Willett. “Those top earners are the prime prospects for home purchase and luxury rentals.”