Fannie Mae has released its latest Home Purchase Sentiment Index® (HPSI), tracking changes in consumer attitude over the month of July 2024. That month, the index decreased 1.1% to 71.5, suggesting an overall lack of enthusiasm. Changes in consumer responses are minute but indicative of a negative trend.
Key details:
- 17% of respondents said that now is a good time to buy a home. In June, 19% said so.
- 82% said now is a bad time to buy–in June, this was 81%. These results suggest consumer optimism was already at a low point and remains slipping further down.
- 65% of respondents said now is a good time to sell a home; in June, this was 66%. 34% of respondents said now is a bad time to sell a home, compared to 33% in June.
- 41% of respondents said they expect home prices will go up in the next 12 months. (In June, 45% said this.) 21% expect home prices to go down in the next 12 months, a marginal improvement from June’s 17%.
- 29% expect mortgage rates to go down in the next 12 months (compared to 24% the previous month), while 31% expect mortgage rates will increase (compared to 33% saying so in June).
- 77% of respondents said they are not concerned about losing their job in the next 12 months, whereas in June, 79% said this.
- 18% said that their household income is significantly higher than it was 12 months ago. (In June, 16% said this.) 11% said their household income decreased significantly (compared to 10% last month). For the last two months, most respondents (72% in June and 69% in July) said their household income remained about the same–a sign of, if nothing else, economic continuity.
Expert takeaway:
“While we’re seeing signs that affordability may be improving in certain parts of the country as supply slowly comes online, household incomes remain stretched relative to would-be mortgage or rent payments and our latest survey once again reflects real consumer frustration with the housing market,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Our recently published Mortgage Understanding Study reaffirmed what we’ve long known: that a significant majority of consumers want to own a home. However, 82% told us in July that it’s a ‘bad time’ to buy, a share that’s remained consistent since January 2023, and these particular respondents continue to point to elevated prices and mortgage rates as the primary reasons for that belief. Meanwhile, there seems to be little expectation among the general population that homebuying conditions will improve in the near future: More consumers than not see home prices rising further; and slightly more consumers think mortgage rates will increase, rather than decrease, over the next 12 months.”
Duncan continued: “We’re currently forecasting home price growth to decelerate through next year and mortgage rates to average 6.2% by the fourth quarter of 2025 – and, like consumers, we continue to view affordability as the primary constraint to home sales activity. One data point we think bears monitoring: The share of respondents who say they would rent, rather than buy, on their next move has been trending slowly upward of late. Right now, it’s difficult to tell if this reflects simple buyer fatigue or a greater sense of disenchantment with the market, but we think it could have important implications should the trend continue.”
For the full Fannie Mae report, click here.
