Fannie Mae: Would-Be Homebuyers Feeling Squeeze of Higher Home Prices, Mortgage Rates

Just 17 percent of consumers think it’s a good time to buy a home, reported Fannie Mae, Washington, D.C.

The Fannie Mae Home Purchase Sentiment Index stayed flat in May, decreasing by only 0.3 points but inching nearer its 10-year- and pandemic-low of 63.0 from April 2020. Surveyed consumers continue to express concerns about housing affordability, with the “Good Time to Buy” indicator reaching a new survey low, as 79% of respondents reported that it’s a bad time to buy a home.

Additionally, 70% of respondents expect mortgage rates to continue to rise over the next 12 months. A greater share of consumers also expressed concern that they may lose their job in the next 12 months, but that component remains firmly positive generally, with only 16% of consumers expressing pessimism. Year over year, the full index is down 11.8 points.

“Consumers’ expectations that their personal financial situations will worsen over the next year reached an all-time high in the May survey, and they expressed greater concern about job security,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Further, respondents’ pessimism regarding homebuying conditions carried forward into May, with the percentage of respondents reporting it’s a bad time to buy a home hitting a new survey high. The share reporting that it’s ‘easy to get a mortgage’ also decreased across almost all segments.”

The HPSI is down 11.8 points compared to the same time last year. Other findings:

–The percentage of respondents who say it is a good time to sell a home increased from 72% to 76%, while the percentage who say it’s a bad time to sell decreased from 21% to 19%.

–The percentage of respondents who say home prices will go up in the next 12 months increased from 44% to 47%, while the percentage who say home prices will go down decreased from 25% to 23%. The share who think home prices will stay the same decreased from 26% to 25%.

–The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 5% to 4%, while the percentage who expect mortgage rates to go up decreased from 73% to 70%. The share who think mortgage rates will stay the same increased from 18% to 20%.

–The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 84% to 81%, while the percentage who say they are concerned increased from 11% to 16%.

–The percentage of respondents who say their household income is significantly higher than it was 12 months ago remained unchanged at 26%, while the percentage who say their household income is significantly lower increased from 14% to 16%. The percentage who say their household income is about the same decreased from 56% to 54%.