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Consumer Confidence In Housing Takes Another Hit

Navi Persaud
Jan 07, 2021
House in the suburbs.

Fannie Mae's Home Purchase Sentiment Index fell for the second consecutive month in December to 74, a 6-point decline from November. Fannie also reports that five of the six HPSI components decreased month-over-month, with consumers sharing more pessimistic views of homebuying and home-selling conditions.

"The HPSI declined for the second consecutive month and fell to its lowest level since May 2020, as consumers adjusted to the worsening COVID-19 conditions of the first few weeks of December – the survey collection period," said Doug Duncan, Fannie Mae senior vice president and chief economist, according to the report. "Both the 'Good Time to Sell' and 'Good Time to Buy' components fell significantly, with respondents overwhelmingly noting the unfavourability of economic conditions. In particular, the sell-side component fell for the first time since April and by 18 points, reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes. If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales."

The percentage of respondents who said it is a good time to buy a home decreased from 57% to 52%, while the percentage who say it is a bad time to buy increased from 35% to 39%. This means the net share of Americans who say it is a good time to buy decreased 9 percentage points month-over-month. The percentage of respondents who say it is a good time to sell a home decreased from 59% to 50%. Additionally, the percentage who say it's a bad time to sell increased from 33% to 42%. The net share of those who say it is a good time to sell decreased 18 percentage points month-over-month.

When it comes to home price expectation, 41% expect home prices to increase over the next 12 months. Meanwhile, the percentage who say home prices will go down increased from 13% to 16%. The share who think home prices will stay the same decreased from 35% to 34%.

The percentage of respondents who say mortgage rates will go down in the next 12 months, remained the same at 8% and the percentage of folks who expect mortgage rates to go up also remained unchanged at 43%. The share who think mortgage rates will stay the same decreased from 40% to 39%.

Job security concerns are also weighing heavily on consumers. Fannie reports that the number of people who say they are concerned about their jobs increased from 24% to 25%.

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