US consumers are reconsidering major purchases as tariffs spark price hikes. A recent report from Redfin reveals that more than 30% of Americans are postponing big-ticket purchases like homes and cars, with roughly a fourth canceling their plans entirely. Over half of the respondents suggested that tariff policies would deter them from making significant purchases this year, while around one out of ten indicated that they were encouraged to make a substantial purchase due to tariffs.
The responses also had political undertones. On average, Democrats were found to be modifying their plans more frequently than Republicans. Over 40% of Democrats were delaying plans for significant purchases, with more than a third completely canceling their plans. This compares to 20% and 15% of Republicans respectively.
Mortgage rates have been fluctuating while tariffs threaten to hike construction costs. This precarious economic landscape is compelling buyers to cut budgets, leading to a probable dip in demand for homes, according to Redfin. Specialists in the auto sector predict increasing car prices, which could suppress demand, although some may have accelerated their car purchase to beat the imminent price rise.
Redfin Economics Lead, Chen Zhao, notes in the report that the increased chances of a recession, currently over 50% according to betting markets, are causing people to think twice about investing large amounts of money in homes or cars. Consumers are showing fiscal restraint due to concerns regarding job security and the increasing cost of daily necessities. Zhao suggests that this reduced demand could stabilize or even decrease home prices, and homebuyers may soon be witnessing a decline in mortgage rates - hinting at a sliver of hope.
Despite this, US retail sales saw a notable surge of 1.4% in March - the largest monthly rise since 2023, says government data.