The good news is that people still think it’s a good time to sell a house. The bad news is that they don’t think it’s as good a time to buy one because of concerns over rising home costs and mortgage interest rates, according to a Fannie Mae national housing survey.
“A survey-record share of consumers – particularly homeowners and higher-income individuals – expect mortgage rates to increase in the next 12 months, likely owing to signals that the Fed will raise rates to slow the pace of inflation,” Doug Duncan, Fannie Mae senior vice president and chief economist, said. “High home prices continue to be the most commonly cited reason by consumers for their belief that it’s a good time to sell (and a bad time to buy) a home; notably, the ‘good time to buy’ sentiment among renters dropped to a new survey low. This suggests that homeowners and higher-income groups may recognize the importance of getting ahead of the rising rate environment, while renters are keenly feeling the double constraint on home purchase affordability of rising house prices and rising interest rates.”
Duncan added that the company’s home purchase sentiment index (HPSI) managed to increase moderately in February, though it still remains slightly lower on a year-over-year basis.
“Continued negative perceptions around homebuying conditions were offset in part this month by consumers’ increased sense of job security, which we believe is likely due to labor market tightness and declining COVID case counts,” he said. “However, with recent geopolitical events creating additional economic uncertainty – including likely increasing inflationary pressure – we believe the additional headwinds will compound existing affordability constraints to further soften mortgage demand in the coming year.”
The survey of about 1,000 people was conducted between Feb. 1 and Feb. 22, prior to Russia’s invasion of Ukraine.
The HPSI is constructed from answers to six of 100 national housing survey questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.
The percentage of respondents who say it is a good time to buy a home increased from 25% to 29%, while the percentage who say it is a bad time to buy decreased from 70% to 67%.
The percentage of respondents who say it is a good time to sell a home increased from 69% to 72%, while the percentage who say it’s a bad time to sell remained unchanged at 22%.
The percentage of respondents who say home prices will go up in the next 12 months increased from 43% to 46%, while the percentage who say home prices will go down increased from 14% to 16%. The share who think home prices will stay the same decreased from 35% to 32%
The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 4% to 3%, while the percentage who expect mortgage rates to go up increased from 58% to 67%. The share who think mortgage rates will stay the same decreased from 28% to 22%.
The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 78% to 87%, while the percentage who say they are concerned decreased from 17% to 9%.
The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 26% to 27%, while the percentage who say their household income is significantly lower decreased from 14% to 12%. The percentage who say their household income is about the same remained unchanged at 56%.
The HPSI increased in February by 3.5 points to 75.3, but it is down 1.2 points compared to the same time last year.