Americans’ economic outlook weakened through September 2026, while homebuying payments remained near historic highs and millions of households were already spending an outsized share of income on housing. The pressures overlap, but they are not the same: low consumer sentiment is a measure of how people feel, and housing affordability varies by location, tenure and household finances.
What the latest sentiment reading says
The University of Michigan’s September 2026 consumer sentiment release put the index at its lowest level in four months and 15% below January’s reading. Respondents’ assessments of both current and year-ahead personal finances weakened, while concerns about high prices continued to rise. The survey measures perceptions; it is not a direct count of economic output, household income or consumer spending. Joanne Hsu, the university economist who directs the Surveys of Consumers, said: “Overall, interviews reveal broad agreement across demographic and political groups that the outlook for the economy has softened over the course of the year.” University of Michigan Surveys of Consumers
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The preceding August final reading was 51.7, down from 55.2 in July and 58.2 in August 2025. That month-to-month change was 3.5 points, smaller than the 4.8-point change the university’s methodology notes say is required for statistical significance at the 95% level. The September release is the newer reading and should not be inferred from August’s figures. August 2026 final release and methodology notes
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Why housing still feels difficult
Buying a home
Home prices and mortgage rates combine to keep monthly payments high for prospective buyers. Harvard’s 2026 housing report says the payment on a median-priced home remained near historic highs in late 2025 under its modeled assumptions. That is a qualified estimate, not a universal payment quote: a buyer’s actual monthly cost depends on the home price, down payment, rate, taxes, insurance and other expenses. Harvard Joint Center for Housing Studies, The State of the Nation’s Housing 2026
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Existing-home sales totaled 4.1 million in 2025, unchanged from 2024 and at a three-decade low, according to Harvard JCHS. That points to a slow market, but it does not by itself show why a particular household did not buy or prove that every region had the same conditions.
Renting and owning
The most recent national tally of housing cost burdens is based on 2024 data, not a real-time 2026 count. Harvard JCHS estimated that 43.5 million U.S. households spent more than 30% of income on housing: 22.7 million renter households and 20.7 million homeowner households. Spending more than 50% of income qualifies as severely cost-burdened. These figures come from Harvard’s tabulation of American Community Survey data. Harvard JCHS housing-burden analysis
For owners, housing costs extend beyond mortgage principal and interest to include property taxes, insurance, utilities and maintenance. Renters face a different mix of expenses and have less control over lease terms. Income, age, location and tenure all shape how much room a household has in its budget; owners with older, below-market mortgages may experience costs differently from people trying to buy now.
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Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →How economic anxiety and housing constraints can reinforce each other
When households are less confident about prices, finances or job prospects, they may put off a home purchase, move or household formation. Housing costs can also make those decisions harder by raising the income needed to move or buy. Harvard JCHS reports that household growth slowed for a third consecutive year in 2025, to 1.1 million households, compared with an annual average of 2.0 million in 2020 and 2021. The report links the slowdown with weaker job conditions, debt and low consumer sentiment, and says uncertainty and high housing costs discourage mobility and household formation. This is evidence of pressures that can interact—not proof that housing costs alone caused the sentiment decline. Harvard Joint Center for Housing Studies
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why this is not a uniform national housing story
National cost burdens remain extensive, but local rent markets have not all moved in the same direction. Harvard reports that rental demand softened and rents fell or flattened in many areas as vacancies rose. A household facing a high rent burden can still be under pressure even where asking rents have stopped climbing; conversely, a local rent decline does not establish that housing is affordable for every renter there. Harvard JCHS, June 2026 release on housing costs and softening demand
These indicators also describe different things and periods. Michigan’s sentiment index tracks survey responses, while Fannie Mae’s separate Home Purchase Sentiment Index uses six questions from its monthly National Housing Survey about buying and selling conditions, prices, mortgage rates, job-loss concerns and income changes. The indices are not interchangeable. Fannie Mae National Housing Survey methodology Fannie Mae Home Purchase Sentiment Index
The clearest reading is that consumer outlook has softened while significant housing affordability pressures persist. Neither trend establishes that a recession is underway, that household spending is falling, or that housing has become less affordable everywhere in 2026.
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