July's Fannie Mae Home Purchase Sentiment Index (HPSI) showed signs of consumer frustration with the housing market.
The July 2024 HPSI decreased by 1.1 points in July to 71.5. This month, only 17% of consumers indicated that it's a good time to buy a home, down from 19% in June, while the share believing it's a good time to sell decreased from 66% to 65%.
The HPSI uses data from Fannie Mae's National Housing Survey, which is a monthly attitudinal survey that polls 1,000 members of the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy.
The proportions of people predicting home prices will rise versus fall over the next 12 months have converged, but still differ significantly, with 41% expecting an increase and 21% expecting a decrease. Meanwhile, 29% of consumers anticipate a decline in mortgage rates over the next year, while 31% expect rates to go up.
Overall, the index has risen by 4.7 points compared to the previous year.
"While we're seeing signs that affordability may be improving in certain parts of the country as supply slowly comes online, household incomes remain stretched relative to would-be mortgage or rent payments, and our latest survey once again reflects real consumer frustration with the housing market," said Fannie Mae Senior Vice President and Chief Economist, Doug Duncan. "Our recently published Mortgage Understanding Study reaffirmed what we've long known: that a significant majority of consumers want to own a home. However, 82% told us in July that it's a ‘bad time' to buy, a share that's remained consistent since January 2023, and these particular respondents continue to point to elevated prices and mortgage rates as the primary reasons for that belief."
Duncan continued, "Meanwhile, there seems to be little expectation among the general population that homebuying conditions will improve in the near future: More consumers than not see home prices rising further; and slightly more consumers think mortgage rates will increase, rather than decrease, over the next 12 months."
Duncan also included that Fannie Mae is currently forecasting home price growth to decelerate through next year and mortgage rates to average 6.2% by the fourth quarter of 2025. "Like consumers, we continue to view affordability as the primary constraint to home sales activity. One data point we think bears monitoring: The share of respondents who say they would rent, rather than buy, on their next move has been trending slowly upward of late. Right now, it's difficult to tell if this reflects simple buyer fatigue or a greater sense of disenchantment with the market, but we think it could have important implications should the trend continue," Duncan added.
