HousingWireHousingWire
Americans have taken notice of the shifting economic conditions since the beginning of President Donald Trump’s second term, and they don’t like what they see.
According to the newest survey data from the University of Michigan, consumer sentiment is experiencing its steepest three-month decline since 1990, having fallen by 32% since January.
The 52.2 reading for April represents an 8.4% decline from March and a 32.4% drop compared to one year ago. Perceptions of current economic conditions suffered a 6.3% monthly drop, and consumer expectations fell by 10.1% month over month.
The decline in consumer sentiment is most prevalent among the middle class, but it’s happening across all demographics and political affiliations. Inflation expectations for the next year jumped from 5% in March to 6.5% in April.
It’s no secret as to why consumers feel jittery about the economy. The announcement of Trump’s new global tariff regime on April 2 shocked the world with its scope and scale. Markets cratered on the news, forcing Trump to pause the levies just hours after they took effect on April 9.
The spring homebuying season was expected to be positive this year, but the drop in consumer confidence has thrown things into flux. While it will likely be later in the summer before data can definitively show how the housing market is impacted, the tariff announcement has contributed to mortgage rates returning to the 7% range and to a substantial drop in weekly mortgage applications.
Many buyers will back off for now and take a wait-and-see approach until the dust settles on the volatility caused by the tariff announcement. This comes in spite of rapidly rising inventory in much of the country, some of which could be tied to sellers wanting to get out ahead of any major long-term negative impacts of the tariffs.
Trump’s pause stopped the economic bleeding, and stock indexes have recovered much of the ground they lost between the announcement and the pause. But uncertainty remains high heading into May.
The global tariff pause is only for 90 days, and the astronomical tariff on China remains in effect, although Trump has signaled that the 145% currently levied against the country is “too high.” Administration officials have indicated that the president is ready to make a deal, but China has denied reports of ongoing negotiations.
