Deferring Homebuying

By: Liz Strait, PhD


The current economic environment, particularly the residential housing market, is reshaping personal finance decisions and life plans for numerous individuals. For many Americans, owning a home is the definition of personal financial success. Yet, recent trends related to home prices and mortgage rates have made that milestone harder, if not impossible, to reach. As a result, many potential homebuyers are redefining their financial goals and reallocating their income and savings as a result.  These changing goal posts are important for Financial Professionals (FPs) to understand, as are any biases that may lead to suboptimal financial decisions because of this shifting landscape.

In a previous blog post, I discussed increasing borrowing costs and gridlock in the residential housing market. This post is a follow-up to that but focuses instead on how spending and savings patterns have changed in the face of increasingly inaccessible housing prospects.‍

Client Impacts

Recently, we have seen the following trends in the residential housing market among US consumers:

Source: FRED Economic Data via the St. Louis Federal Reserve Bank (MSPUS and MORTGAGE30US data series). Median home prices were adjusted to October 2023 dollars using the Bureau of Labor Statistics (BLS) CPI Inflation Calculator.

 Larger Economic Impacts

The housing market’s health is intricately tied to the overall economy, so changes can cascade through various sectors and have long-term economic implications—regardless of whether any specific individual is facing the difficulties described above.‍

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