With the Fannie Mae Home Purchase Sentiment Index falling to 71.8, it is now at the lowest level since May 2020 with affordability constraints weighing heavy on the housing market. The HPSI is down 5.9 points year-over-year.
Overall, four of the index's six components decreased month-over-month, including the components measuring consumers' perceptions of homebuying and home-selling conditions. In Jan., a survey record-low 25% of respondents reported that it's a good time to buy a home, compared to the 69% of consumers who reported that it's a good time to sell, according to Fannie Mae.
Consumers are also more concerned about job stability and the future path of mortgage rates. According to Fannie Mae's HPSI, the percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 82% to 78%, while the percentage who say they are concerned increased from 16% to 17%.
“Consumer sentiment toward housing softened further in January – the HPSI fell 2.4 points to 71.8 – as affordability and supply constraints continue to limit home purchase opportunities, particularly among younger households,” said Doug Duncan, Fannie Mae Senior vice president and chief economist.
The percentage of respondents who say it is a good time to buy a home decreased from 26% to 25%. Meanwhile, the percentage who say it is a bad time to buy increased from 66% to 70%. Just 69% of respondents believe it is a good time to sell a home, down from 76% from the previous month. The percentage of folks who believe it is a bad time to sell a home increased from 17% to 22%.
“Younger consumers – more so than other groups – expect home prices to rise even further, and they also reported a greater sense of macroeconomic pessimism. Additionally, while the younger respondents are typically the most optimistic about their future finances, this month their sense of optimism around their personal financial situation declined. All of this points back to the current lack of affordable housing stock, as younger generations appear to be feeling it particularly acutely and, absent an uptick in supply, may have their homeownership aspirations delayed. On the whole, the latest HPSI results are consistent with our forecast of slowing housing activity in the coming year.”
As for home prices, the percentage of respondents who believe home prices will increase over the next 12 months decreased from 44% to 43%. Additionally, the percentage who say home prices will go down decreased from 19% to 14%. The share who think home prices will stay the same increased from 30% to 35%, according to Fannie Mae.
