Homebuying Sentiment Hits New Survey Low
Citing Unaffordability, 86% of Consumers Say It’s a Bad Time to Buy a Home
The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 2.5 points in May to 69.4 as the component measuring consumer attitudes toward homebuying conditions fell markedly, reaching an all-time survey low. This month, only 14% of consumers indicated that it’s a good time to buy a home, down from 20% last month, while the share believing it’s a good time to sell fell from 67% to 64%. Meanwhile, consumers continue to believe affordability will remain tight for the foreseeable future, as respondents believe that, on net, home prices and mortgage rates will go up over the next year. Among the positives from the survey: A growing share of respondents, now 20%, indicated that their household income is significantly higher than it was a year ago. The full index is up 3.8 points year over year.
“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability. This is most clearly evidenced by our ‘good time to buy’ component falling to a new survey low this month. On the other hand, homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months. This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future. As our latest forecast notes, we expect improvements to housing inventory will lead to slightly increased sales activity through the end of the year.”
Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased 2.5 points in May to 69.4. The HPSI is up 3.8 points compared to the same time last year. Read the full research report for additional information.
- Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 20% to 14%, while the percentage who say it is a bad time to buy increased from 79% to 86%. As a result, the net share of those who say it is a good time to buy decreased 13 percentage points month over month.
- Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 67% to 64%, while the percentage who say it’s a bad time to sell increased from 32% to 35%. As a result, the net share of those who say it is a good time to sell decreased 6 percentage points month over month.
- Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged at 42%, while the percentage who say home prices will go down remained unchanged at 18%. The share who think home prices will stay the same increased from 39% to 40%. As a result, the net share of those who say home prices will go up in the next 12 months increased 2 percentage points month over month.
- Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 26% to 25%, while the percentage who expect mortgage rates to go up decreased from 33% to 31%. The share who think mortgage rates will stay the same increased from 40% to 42%. As a result, the net share of those who say mortgage rates will go down over the next 12 months remained unchanged month over month.
- Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 76% to 75%, while the percentage who say they are concerned increased from 23% to 24%. As a result, the net share of those who say they are not concerned about losing their job decreased 1 percentage point month over month.
- Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 17% to 20%, while the percentage who say their household income is significantly lower remained unchanged at 12%. The percentage who say their household income is about the same decreased from 70% to 67%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 3 percentage points month over month.
Detailed HPSI & NHS Findings
For detailed findings from the Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.
SOURCE Fannie Mae
