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Key Takeaways
- Redfin reports that more than 30% of Americans delay major purchases like a house or car and about a quarter cancel their plans.
- Redfin’s report showed that Democrats alter their plans at a faster rate than Republicans.
- Redfin says that fluctuating mortgage rates, as well as an increase in construction cost due to tariffs, create an unstable economy.
Tariffs are forcing U.S. consumers rethink large purchases.
Redfin released a report that showed more than 30% Americans have delayed plans to buy major items, such as a home or car. A quarter of Americans have cancelled their plans.
According to the report, consumers are concerned about the impact tariffs will have on their spending. More than half of respondents stated that tariff policies would make them less likely make a major purchase in this year. Tariffs are said to be the reason why one in ten consumers is more likely to purchase a major item.
There's a political aspect to the responses: On average, Democrats are altering their plans at a higher rate than Republicans, as over 40% of Democrats say they are delaying plans to make big purchases and more than one in three are fully cancelling plans. The Republican response is 20% and 15%.
Mortgage rates have fluctuated, and tariffs are likely to increase construction costs. Redfin’s report said that with the uncertain economic outlook, budgets of buyers are being cut and homebuying is likely to drop. Auto-market experts expect car prices to increase, weighing down on demand. Some people may have bought vehicles before then.
Redfin Economics Lead Chen Zhao stated in the report that “Betting markets place the odds of a depression at more than 50%. This makes people hesitant to spend a large amount of money on a home or car.”
Zhao says that consumers “tighten their belts”, due to concerns about job security, and increased costs of daily expenses. However, she also says the drop of demand could cause home values to stay flat, or even fall. Mortgage rates could also drop soon, giving buyers a small amount of optimism.
Government data shows that US retail sales rose by 1.4% in march, the highest monthly increase since 2023.