Confidence in housing sagged in July in the Fannie Mae Home Purchase Sentiment Index® (HPSI), with optimism weakening for both homebuyers and sellers due to limiting economic factors and unaffordability. The HPSI overall posted 86.8, down 1.5 percentage points from June, when the Index reached a second all-time high.
The share of homebuyers surveyed for the Index who believe now is a good time to buy dropped seven percentage points to 23 percent—an Index low. The share of sellers surveyed who believe now is a good time to sell tumbled 11 percentage points to 28 percent. The shy-away on the seller side is unexpected, says Doug Duncan, chief economist and senior vice president at Fannie Mae, but could stem from a softening growth forecast for the economy.
“It’s clear that high home prices are a growing challenge helping to send buying sentiment to a record low,” Duncan says. “However, we find the notable decline in selling sentiment surprising. If it persists, this month’s decrease in optimism regarding the direction of the economy, which appears to coincide with rising uncertainty regarding the outlook for pro-growth legislation this year, could weigh on overall housing sentiment in the second half of the year.”
High prices have been an obstacle for buyers in recent years, many of whom for debt has mounted and incomes have stagnated. High prices are staving off sellers, as well, who fear being unable to afford a new home priced at today’s standards. Tellingly, 47 percent of all surveyed anticipate home prices will rise, but only 16 percent reported their household incomes have grown in the past year.
One encouraging find? Seventy-five percent of those surveyed feel secure in their jobs—a perception hand-in-hand with positive housing sentiment.
Source: Fannie Mae
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.
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