Sellers and buyers are at odds in today’s market as homeowners retain the edge and buyers continue to battle it out for their purchases—a trend that may be waning, however, according to recent reports. The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 0.8 points to 74.7 in November, reporting the greatest economic pessimism in 10 years.
Four of the index’s six components decreased month-over-month. In November, 74% of respondents said it was a good time to sell a home, compared to the 29% of consumers who said it was a good time to buy. Expectations that mortgage rates will increase over the next 12 months remain strong, and consumers are pessimistic about the direction of the economy, with 70% saying it is on the wrong track. Year-over-year, the full index is down 5.3 points.
The findings:
- Good/Bad Time to Buy: The percentage of respondents who said it was a good time to buy a home decreased from 30% to 29%, while the percentage who said it was a bad time to buy decreased from 65% to 64%.
- Good/Bad Time to Sell: The percentage of respondents who said it was a good time to sell decreased from 77% to 74%, while the percentage who said it was a bad time to sell increased from 17% to 21%.
- Home Price Expectations: The percentage of respondents who said home prices will go up in the next 12 months increased from 39% to 45%, while the percentage who said home prices will go down decreased from 22% to 21%. The share who think home prices will stay the same decreased from 32% to 28%.
- Mortgage Rate Expectations: The percentage of respondents who said mortgage rates will go down in the next 12 months remained flat at 5%, while the percentage who expect mortgage rates to go up increased from 55% to 58%. Those who think mortgage rates will stay the same decreased from 33% to 32%.
- Job Concerns: The percentage of respondents who said they were not concerned about losing their job in the next 12 months decreased from 84% to 83%, while the percentage who said they were concerned remained flat at 15%.
- Household Income: The percentage of respondents who said their household income was significantly higher than it was 12 months ago remained flat at 23%, while the percentage who said their household income was significantly lower increased from 12% to 13%. The percentage who said their household income was about the same decreased from 62% to 61%.
The takeaway:
“The HPSI experienced some shuffling among its underlying components in November, but the overall index once again stayed relatively flat,” said Mark Palim, Fannie Mae vice president and deputy chief economist, in a statement. “While consumers expressed even greater concern regarding the direction of the economy, with the share of respondents expressing pessimism hitting a 10-year high, overall housing sentiment remained stable. Consumers’ concerns for their personal job situation have eased and respondents also reported feeling better about their income level compared to a year ago, with both of those components now nearing their pre-COVID levels.”
“Even though consumers are reporting broader macroeconomic concerns—with much of it likely tied to inflation—so far any negative sentiment tied to the economy has not translated into a meaningful decrease in actual purchase mortgage demand,” added Palim. “According to this month’s survey, an even greater share of consumers (particularly those with low and moderate incomes) expects mortgage rates to go up in the next 12 months, which may be a signal that some households plan to pull-forward their home purchase plans despite growing economic apprehension.”
To view the full report, click here.
