Fannie Mae’s Home Buying Sentiment Index (HPSI) rose slightly in July, signifying increased consumer confidence in their personal financial situation, but also revealing a greater pessimism towards housing purchase conditions.
Three of the six components of the HPSI increased month-over-month, including components that measure job security and home price expectations. However, 82% of consumers reported that it is a “bad time to buy” a house, a new poll high and an increase of 78% in June. The entire index is up 4.0 points year-over-year.
“While consumers report confidence in components related to their personal financial situation, it is unlikely that we will see housing confidence catch up with other, broader measures of economic confidence. until there is a significant improvement in the affordability of home buyingsaid Doug Duncan, Vice President and Chief Economist at Fannie Mae.
“In July, a large majority of consumers indicated that their jobs are stable and that their income is the same or better than twelve months ago. However, home buying sentiment once again hit an all-time low, with only 18% saying it is a good time to buy a houseDuncan added.
Fannie Mae notes that consumers continue to attribute difficult conditions to high home prices and unfavorable mortgage rates. Additionally, the proportion of consumers who expect house prices to continue rising has also been on a steady rise since March, which may increase perceptions of unaffordability.
On the other hand, the real estate company cites that it has not seen much movement in the ‘good time to sell’ component in recent months, an indication that current low levels of existing homes for sale will likely continue persisting in the short term.
The percentage of respondents who say that house prices will rise in the next 12 months increased from 36% to 41%, while the percentage saying house prices will fall decreased from 26% to 24%. The share who think home prices will stay the same decreased from 37% to 34%. As a result, the net share of those saying home prices will rise in the next 12 months rose 6 percentage points month-over-month.
When it comes to mortgage rate expectations, the percentage of respondents who say they mortgage rates will fall in the next 12 months remained unchanged at 16%, while the percentage expecting mortgage rates to rise decreased from 47% to 45%. The share who think mortgage rates will stay the same increased from 36% to 38%. As a result, the net share of those who say mortgage rates will drop in the next 12 months increased 3 percentage points month-over-month.
The Fannie Mae Home Buying Sentiment Index (HPSI) increased 0.8 points in July to 66.8. The HPSI is up 4.0 points compared to the same period last year.
For more detail on the Fannie Mae report and its methodology, visit here.
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· Real Estate Market Myths Affecting Buyers and Sellers in the US Today.
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