Fannie Mae’s Home Purchase Sentiment Index (HPSI) fell 2.0 points to 62.8 in July, the lowest level since 2011 and below the all-time high in 2019. Consumers surveyed continued to express pessimism about home buying conditions, at just 17%. Respondents report that it is a good time to buy a home.
Meanwhile, the percentage of consumers who believe it’s a good time to sell has started to slide in recent months, falling from 76 percent in May to 67 percent in July. Overall, four of the index’s six components declined during the month, including the component related to home price growth expectations, which has declined meaningfully over the past few months but remained positive across the net. The index is down 13.0 points year-on-year.
Doug Duncan, Fannie Mae’s senior vice president and chief economist, said, “The HPSI has declined steadily for most of the year as high mortgage rates continue to take a toll on housing affordability. A growing perception that it’s a bad time to buy and sell a home is fueled by a rise in poor mortgage rates among consumers. In addition, the ‘good time to sell’ segment has declined meaningfully over the past two months, suggesting that consumers are signaling a softening of selling conditions and, on the net, fewer consumers expecting home prices to rise.
“As home price growth is expected to slow and further decline, we believe that consumer reaction to the current housing climate is likely to increase over time: Some homeowners may choose to list their homes sooner to take advantage of higher valuations, while some homebuyers may experience lower home prices.” “They choose to postpone their buying decisions, believing that they can,” Duncan continued.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) fell 2.0 points to 62.8 in July. The HPSI is down 13.0 points compared to the same period last year.
The percentage of respondents who say it is a good time to buy a home has decreased from 20% to 17%, while the percentage who say it is a bad time has increased from 75% to 76%. As a result, the net share of those who say it’s a good time has fallen by 4 percent month-on-month.
The number of respondents who said it was a good time to sell a home decreased from 68 percent to 67 percent, while those who said it was a bad time rose from 26 percent to 27 percent. As a result, the net share of people saying it’s a good time to sell fell 2 percent month over month.
The percentage of respondents who said house prices will rise in the next 12 months fell from 44 percent to 39 percent, while the percentage who said house prices would fall rose from 27 percent to 30 percent. The share who think house prices will stay the same has increased from 23 percent to 26 percent. As a result, the net share of Americans who say home prices will rise fell by 8 percent in the month.
When it comes to mortgage rates, the percentage of respondents who expect mortgage rates to decrease in the next 12 months has increased from 5 percent to 6 percent, while the percentage who expect mortgage rates to increase is unchanged at 67 percent. The share who thought mortgage rates would remain the same remained unchanged at 21 percent. As a result, the net share of Americans who say their mortgage rates will decrease in the next 12 months increased by 1 percentage point per month.
Regarding job loss, 78 percent of respondents who said they are not concerned about losing their job in the next 12 months remained the same, while the percentage who said they were concerned increased from 21 percent to 22 percent. As a result, the net share of Americans who say they are not worried about losing their jobs fell 1 percentage point over the month.
The percentage of respondents who said their household income was significantly higher than 12 months ago decreased from 25 percent to 24 percent, while the percentage who said their household income was significantly lower decreased from 16 percent to 13 percent. The percentage who say their household income is the same has increased from 58 percent to 61 percent. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased by 2 percent per month.
Read the full research report here.
Image: Dillon Kydd on Unsplash