Fannie Mae recently released its Home Purchase Sentiment Index® (HPSI), which decreased 3.9 points to 75.8 in July, due to affordability and inventory concerns.
The details:
Good vs. Bad Time to Buy and Sell: On the buy-side, 66% of respondents said it’s a bad time to buy a home, up from 64% last month. On the sell-side, 75% of respondents said it’s a good time to sell, down slightly from 77% in July. Year-over-year, the overall index is up 1.6 points.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 48% to 46%, while the percentage who say home prices will go down remained flat at 21%.
Mortgage Rate Expectations: Those who believe mortgage rates will go down in the next 12 months decreased from 6% to 5%, while the percentage who expect mortgage rates to go up remained flat at 57%. The share who think mortgage rates will stay the same increased from 30% to 31%.
Job Concerns: Those not concerned about losing their job in the next 12 months decreased from 88% to 84%, while those who say they are concerned increased from 11% to 13%.
Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago remained unchanged at 27%, while those who say their household income is significantly lower increased from 13% to 14%. The percentage who say their household income is about the same remained unchanged at 56%.
The takeaway:
“Historically prime home-buying groups appear to be increasingly sensitive to the lack of affordability, as home prices continue to increase and homes for sale remain in short supply,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “While all surveyed consumer segments have reported increased pessimism toward home-buying conditions over the past several months, two of the segments perhaps best positioned to purchase—consumers aged 35-44 and those with middle-to-higher income levels—have indicated even more pessimism than other groups.”
“Overall, the HPSI remains within a tight range established a few months after the onset of the pandemic in 2020. Consumer sentiment toward home-buying hit yet another survey low in July, continuing the sharp downward trend established in March. The percentage of respondents citing high home prices as the top reason for it being a ‘bad time to buy’ also reached an all-time high. On the flip side, selling sentiment remains extremely high, and well above pre-pandemic levels, for the same commonly cited reason: high home prices.”
