Fannie Mae Says Homebuying Sentiment Hits New Survey Low
(Illustration courtesy of Fannie Mae)
The Fannie Mae Home Purchase Sentiment Index decreased 2.5 points in May to 69.4 as the component measuring consumer attitudes toward homebuying conditions fell markedly, reaching a survey low.
This month, only 14% of consumers called this a good time to buy a home, down from 20% last month, while the share believing it’s a good time to sell fell from 67% to 64%.
Meanwhile, consumers continue to believe affordability will remain tight for the foreseeable future, as respondents believe that, on net, home prices and mortgage rates will go up over the next year. Among the positives from the survey: A growing share of respondents, now 20%, indicated that their household income is significantly higher than it was a year ago. The full index is up 3.8 points year over year.
“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability.”
Duncan noted the index’s ‘good time to buy’ component fell to a new survey low this month. “On the other hand, homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months,” he added. “This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future.”
Duncan said Fannie Mae’s latest forecast predicts improvements to housing inventory will lead to slightly increased sales activity through the end of the year.
Index Highlights
Mortgage Rate Expectations: The percentage of respondents who say they believe mortgage rates will go down in the next 12 months decreased from 26% to 25%, while the percentage who expect mortgage rates to go up decreased from 33% to 31%. The share who think mortgage rates will stay the same increased from 40% to 42%. “As a result, the net share of those who say mortgage rates will go down over the next 12 months remained unchanged month over month,” Fannie Mae said.
Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 76% to 75%, while the percentage who say they are concerned increased from 23% to 24%. As a result, the net share of those who say they are not concerned about losing their job decreased 1 percentage point month over month, the report said.
Household Income: The percentage of respondents who said their household income is significantly higher than it was 12 months ago increased from 17% to 20%, while the percentage who say their household income is significantly lower remained unchanged at 12%, Fannie Mae found. The percentage who say their household income is about the same decreased from 70% to 67%.
