Homebuyer sentiment increased by 0.6 points to 61.6, the third consecutive increase but still well below pre-pandemic highs and down 10.2 points compared to last year, according to Fannie Mae’s Home Purchase Sentiment Index® (HPSI) for January.
The HPSI found that three of the index’s six components increased month over month, including those associated with home-selling conditions, home price outlook, and household income. In addition, only 17% of respondents believe it’s a good time to buy, likely owing to the ongoing affordability challenges posed by elevated mortgage rates and home prices.
Key highlights:
- Respondents who said it’s a good time to buy a home decreased from 21% to 17%, and the net share of this opinion decreased 9 percentage points MoM. Respondents who said it’s a bad time to buy increased from 76% to 82%.
- 59% of respondents said it’s a good time to sell a home, up from 51% last month, and the net share of this opinion increased 11 percentage points MoM. Meanwhile, 39% of respondents said it’s a bad time to sell, down from 42% last month.
- Respondents who said home prices will go up in the next 12 months increased from 30% to 32%, and the net share of this opinion increased 2 percentage points MoM. Respondents who said home prices will go down remained unchanged at 37%, and the share who think they will stay the same increased from 29% to 30%.
- 13% of respondents said mortgage rates will go down in the next 12 months, down from 14% last month, and the net share of the opinion decreased 2 percentage points MoM. Meanwhile, 52% of respondents said mortgage rates will go up, up from 51% last month, and 33% think they will stay the same, up from 31% last month.
- Respondents who said they are not concerned about losing their job in the next 12 months remained unchanged at 82%, and the net share of this opinion remained unchanged MoM. Respondents who said they are concerned increased from 17% to 18%.
- 22% of respondents said their household income is significantly higher than it was 12 months ago, down from 25% last month, and the net share of this opinion increased 2 percentage points MoM. Meanwhile, 10% respondents said their household income is significantly lower, down from 15%, and 67% said their income is the same, up from 59% last month.
Major takeaway:
“January’s HPSI results showed that consumer sentiment toward the housing market remains subdued by historical standards,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “For consumers, the same affordability issues are persisting, as they continue to indicate that high home prices and high mortgage rates make it a ‘bad time to buy’ a home. The latest survey data also indicated that the majority of consumers expect home prices to decrease or remain flat over the next year, which may incentivize some potential homebuyers to delay their purchase decision. Although ‘good time to sell’ sentiment ticked upward this month, it’s still much lower than it was a year ago, as purchase affordability remains seriously constrained and mortgage demand has receded. Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months.”
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