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Consumers More Pessimistic About Buying, Selling A Home

David Krechevsky
Aug 08, 2022
Fannie Mae HQ

Fannie Mae Home Purchase Sentiment Index falls to its lowest level since 2011.

KEY TAKEAWAYS
  • Fannie Mae's Home Purchase Sentiment Index decreased 2 points in July to 62.8, its lowest level since 2011 and well below the all-time high set in 2019.
  • Only 17% of respondents said it’s a good time to buy a home.
  • Percentage of consumers who believe it’s a good time to sell fell to 67% in July.

Consumers continue to be increasingly pessimistic about buying or selling a home, according to the latest survey by Fannie Mae. 

The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 2 points in July to 62.8, its lowest level since 2011 and well below the all-time high set in 2019.

Surveyed consumers continued to express pessimism about home-buying conditions, with only 17% of respondents reporting it’s a good time to buy a home. Meanwhile, the percentage of consumers who believe it’s a good time to sell has begun ticking downward in recent months, falling from 76% in May to 67% in July, Fannie Mae said.

Overall, four of the index’s six components decreased month over month, including the component associated with home-price growth expectations, which has fallen over the past few months but remains positive on net. Year over year, the full index is down 13 points.

“The HPSI has declined steadily for much of the year, as higher mortgage rates continue to take a toll on housing affordability,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Unfavorable mortgage rates have been increasingly cited by consumers as a top reason behind the growing perception that it’s a bad time to buy, as well as sell, a home.”

In fact, Duncan said, “Consumers appear to be indicating that selling conditions are softening, as the ‘Good Time to Sell’ component has declined meaningfully over the past two months, and, on net, fewer consumers expect home prices to go up.”

With home-price growth slowing, and projected to slow even further, Duncan said Fannie Mae believes “consumer reaction to current housing conditions is likely to be increasingly mixed: Some homeowners may opt to list their homes sooner to take advantage of perceived high prices, while some potential homebuyers may choose to postpone their purchase decision believing that home prices may drop.”

He added that, overall, this month’s HPSI results appear to confirm Fannie Mae’s forecast for moderating home sales over the coming year.

Some highlights from Fannie Mae’s Home Purchase Sentiment Index:

  • Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 20% to 17%, while the percentage who say it is a bad time to buy increased from 75% to 76%. As a result, the net share of those who say it is a good time to buy decreased 4 percentage points month over month.
  • Good/Bad Time to Sell: The percentage of respondents who say it’s a good time to sell a home decreased from 68% to 67%, while the percentage who say it’s a bad time to sell increased from 26% to 27%. As a result, the net share of those who say it is a good time to sell decreased 2 percentage points month over month.
  • Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 44% to 39%, while the percentage who say home prices will go down increased from 27% to 30%. The share who think home prices will stay the same increased from 23% to 26%. As a result, the net share of Americans who say home prices will go up decreased 8 percentage points month over month.
  • Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 5% to 6%, while the percentage who expect mortgage rates to go up remained unchanged, at 67%. The share who think mortgage rates will stay the same also remained unchanged, at 21%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 1 percentage point month over month.
  • Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months remained unchanged at 78%, while the percentage who say they are concerned increased from 21% to 22%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 1 percentage point month over month.
  • Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 25% to 24%, while the percentage who say their household income is significantly lower decreased from 16% to 13%. The percentage who say their household income is about the same increased from 58% to 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 2 percentage points month over month.

Fannie Mae’s Home Purchase Sentiment Index distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions, and complements existing data sources to inform housing-related analysis and decision making.

The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. 

The 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. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). 

Fannie Mae conducts this survey and shares monthly and quarterly results. The July 2022 National Housing Survey was conducted between July 1-21, 2022. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by ReconMR on behalf of PSB Insights and in coordination with Fannie Mae.

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