38% of US Adults Delaying Major Milestones Due to Inflation

Over one-third of U.S. adults say they are reconsidering major milestones such as buying a house or buying a car because of inflation, a new survey by The Balance found. In the survey, 51% of respondents said they are considering such milestone purchases over the next year, and 38% said they are planning to delay or reconsider because of higher prices from inflation that is at a 41-year high.

Buying a Car Takes a Backseat

Buying a car was the top milestone to be delayed due to recent price increases, with 1 in 5 survey respondents saying they are planning to hold off on buying a car over the next year. Among those who were thinking of buying a car over the next year, 76% are now planning to delay or reconsidering. New cars have gotten less affordable due to continued supply shortages, with the average cost of a new car in the U.S. soaring to a record of $48,043 in June, according to auto-industry research company Cox Automotive. The monthly payment for a new car also hit a record high of $730 in June, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

However, a used car might be more affordable as prices on used cars have begun to stabilize as inventory increases. According to Kelley Blue Book, in June, used-car shoppers paid an average of $28,012, down $300 from May’s average.

Gas prices might also be deterring people from buying a car, and while they have started to cool across the nation, a majority of those surveyed by The Balance said they noticed inflation the most at the gas pump.

The Balance’s survey found that those who can do so are forgoing their work commute and choosing to work from home, with 22% of those surveyed saying their job allows them to work remotely. Among them, 59% say they are working from home more because of gas prices.

Americans Put Buying a Home on Hold as Prices Rise

The next most common major purchase to be delayed among survey respondents is buying a house, with 11% putting it off in the next year because of inflation. Of those who were thinking of buying a home in the next year, 78% are now planning to delay or reconsidering all together.

Buying a home has gotten less affordable as mortgage rates have increased sharply over the past few months. In addition, the average sales price of a home hit a record high of $416,000 in June, pushing potential homebuyers out of the market.

As the Federal Reserve continues its fight against inflation by hiking interest rates, borrowing becomes more expensive. That’s because the federal funds rate affects the interest rates of many different types of loans, including car loans and, indirectly, mortgages.

But don’t get discouraged if you have not been able to buy a home yet. Home prices might slow their upward trend over the next year, according to real estate data and analytics company CoreLogic. The firm expects home prices to increase only by 4.3% from June 2022 to June 2023, in contrast to the 18.3% increase in home prices from June 2021 to June 2022. 

Americans Reconsidering Changing Careers

Ten percent of those surveyed by The Balance say they are planning to delay changing careers because of inflation. Among those who were considering changing careers in the next 12 months, 72% are now planning to delay or are reconsidering. The decision to stay put in your job could be wise. The number of job openings in June fell to its lowest level since September, which could mean inflation, rising interest rates, and recession fears are taking a toll on hiring, although the labor market is still considered strong overall with 10.7 million job openings.

Degrees, Weddings, and Babies Also on Pause

Some of those surveyed by The Balance are reconsidering life milestones such as getting married, going to college or grad school, or having children due to higher prices. Six percent of those surveyed are planning to delay going to college or grad school, 5% are reconsidering having children, and 4% are reconsidering having a wedding.

With inflation already stretching budgets for essentials such as gas and groceries, it makes sense to reprioritize major purchases and financial goals. And with the potential of a recession looming, it’s smart to prepare your finances by sticking to a budget and not taking on major expenses. Continuing to save and invest toward your financial goals will set you up for the future, whatever the economy brings.

Methodology

The Balance conducted a survey among 1,200 Americans from June 30 to July 9, 2022. The survey was fielded online via self-administered questionnaire to an opt-in panel of respondents from a market research vendor. To qualify, survey participants (18+) must at least partially manage their own finances. Quotas were used to ensure national representation for gender, race/ethnicity, region, generation, using U.S. Census (2019 ACS) estimates as a benchmark. Quotas were also used to match national representation for political affiliation using Pew Research’s American Trends Panel (2022) as a benchmark.

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