Fannie Mae's Home Purchase Sentiment Index reported a 3.9 point decrease for July 2021. High home prices paired with a serious lack of inventory haven't given consumers much hope on the buying front.
According to the report, 66% of respondents said that it is a bad time to purchase a home, while 75% of respondents believe it is a good time to sell. It is worth noting that the number of folks who are confident that it is a good time to sell, dipped 2% from the previous month.
“Historically prime homebuying groups appear to be increasingly sensitive to the lack of affordability, as home prices continue to increase and homes for sale remain in short supply,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “While all surveyed consumer segments have reported increased pessimism toward homebuying conditions over the past several months, two of the segments perhaps best positioned to purchase -- consumers aged 35-44 and those with middle-to-higher income levels – have indicated even more pessimism than other groups.”
“Overall, the HPSI remains within a tight range established a few months after the onset of the pandemic in 2020. Consumer sentiment toward homebuying hit yet another survey low in July, continuing the sharp downward trend established in March. The percentage of respondents citing high home prices as the top reason for it being a 'bad time to buy' also reached an all-time high. On the flip side, selling sentiment remains extremely high, and well above pre-pandemic levels, for the same commonly cited reason: high home prices.”
While the HPSI fell overall, respondents are still holding out hope, as the report revealed that the number of folks who believe home prices will increase over the next 12 months fell from 48% to 46%. Just 27% of respondents believe that prices will increase over the next 12 months.
Meanwhile, the percentage of respondents who expect mortgage rates to decrease over the next 12 months decreased from 6% to 5%, 57% believe rates will increase over the next 12 months and 31% believe rates will stay the same.
Read more from Fannie Mae's Home Purchase Sentiment Index to see where buyer and seller confidence stands for July 2021.
