Confidence in housing is losing steam, continuing a developing downtrend, according to the Fannie Mae Home Purchase Sentiment Index® (HPSI) for October. At 85.7, the Index slipped 2 percentage points from September.
Twenty-one percent of homebuyers were optimistic about purchasing, and 35 percent of homeowners were optimistic about selling, according to the HPSI.
“After hitting a survey high during the spring home-buying season, the HPSI has trended downward, declining in October to its lowest level in a year,” says Doug Duncan, chief economist and senior vice president at Fannie Mae. “While the October drop was broad-based—all but one of the six HPSI components declined—the net share of consumers who said it’s a good time to buy a home posted the largest decrease, tying its second lowest reading in the survey’s history.
“The further erosion of buying sentiment occurred despite generally positive views of the economy,” Duncan says. “Among those who said it’s a good time to buy, 30 percent—a record high—cited favorable economic conditions as the reason. Meanwhile, the share of consumers who think the economy is on the right track continued to grow, reaching a new survey high.
“The contrast between the survey’s findings of weak home-buying sentiment and overall economic optimism mirrors what we’re seeing in the broader economy,” says Duncan. “While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter—a first for the current expansion.”
The HPSI is derived from Fannie Mae’s National Housing Survey® (NHS).
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