Consumers once again reported mixed feelings about home buying and home selling conditions as well as an increased pessimism about the overall economy. The Consumer Purchase Sentiment Index increased 1 point to 75.5 in October, while 4 of the index’s 6 components increased month-over-month.
In October, a slightly greater share of consumers said it was a good time to buy or sell a house with those numbers now sitting at 30% and 77%, respectively, moving up from 28% and 74% last month. Consumers also had stronger expectations that mortgage rates will increase over the next 12 months. The full index is down 6.2 points year-over-year.
"The (Home Price Sentiment Index) HPSI remained relatively flat this month, staying within the general bounds it began to set in June 2020 – following the initial shock of the pandemic to the index," said Doug Duncan, Fannie Mae senior vice president and chief economist. "While homebuying and home-selling sentiment remain at historically low and high levels, respectively, more consumers now expect that their personal financial situation will not improve over the next 12 months. This is particularly true among surveyed homeowners and older age groups."
The percentage of respondents who said it was a good time to buy a home increased from 28% to 30% — up 3 percentage points — while the percentage of consumers who said it was a bad time to buy decreased from 66% to 65%.
The percentage of respondents who said it was a good time to sell a home increased from 74% to 77% — up 5 percentage points — while the percentage who said it was a bad time to sell decreased from 19% to 17%.
The percentage of respondents who said home prices will go up in the next 12 months increased from 37% to 39%, up 4 percentage points month-over-month. The percentage who said home prices will go down decreased from 24% to 22%, and the percentage who said home prices will remain the same decreased from 33% to 32%.
The percentage of respondents who expect mortgage rates to go down over the next 12 months decreased from 8% to 5%, decreasing 7 percentage points month-over-month. The percentage of respondents who expect mortgage rates to go up increased from 51% to 55%, while the percentage who expect mortgage rates to stay the same remained the same at 33%.
"In October, consumers also reported greater concern about the direction of the economy, with 'right track' sentiment reaching its lowest level since October 2013,” Duncan continued. “We believe the uptick in negative economic sentiment is likely a function of ongoing supply chain disruptions and inflation concerns. However, while economic uncertainty could potentially dampen mortgage demand over the longer term, we believe current market conditions remain conducive to home purchase activity, as demand for homes continues to far outstrip the supply available for sale."
Job concerns are beginning to simmer down, though, with the percentage of respondents who said they are not concerned about losing their job in the next 12 months increasing from 81% to 84%. The percentage who responded that are concerned about losing their job in the next 12 months decreased from 16% to 15%.
However, the percentage of respondents who said their household income is significantly higher than it was 12 months ago decreased from 27% to 23%, while the percentage who said their household income is significantly lower also decreased from 13% to 12%. The percentage who said their household income is about the same increased from 57% to 62%.
Fannie Mae's National Housing Survey (NHS) polled approximately 1,000 respondents via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence.
