Inflation is running at a 40-year high as the costs of everyday goods rise. Americans are increasingly concerned about how inflation will affect their personal finances and their long-term financial goals, including homeownership.
More than half of about 1,000 U.S. adults surveyed in March said that higher costs may have a “big negative impact” on plans like buying a home or retiring comfortably, according to the Country Financial’s Security Index. About 90% of those surveyed are concerned about inflation.
Adding to their inflation concerns, Americans also are concerned about stock market volatility, rising interest rates, and recession fears.
The average consumer is spending $500 more a month on living expenses than a year ago, according to a National Association of REALTORS® blog post from late April.
Home buyers may need to lower their budgets to keep pace. House hunters would be smart to search for a home that is about $40,000 cheaper than they would have a year ago as a result of the rising costs, Gay Cororaton, an NAR research economist, writes on the association’s blog.
“The increased cost of spending on other items impacts the ability of the average consumer to have enough leftover income to purchase a home,” Cororaton writes.
Troy Frerichs, vice president of investment services at Country Financial, told CNBC that consumers should create a budget and consider how the increase in costs may affect monthly household budgets and how it affects long-term financial plans. Some financial plans may need to be changed, he says.