Prospective homebuyers are growing increasingly pessimistic, if the results of a recent survey from Fannie Mae are any indication.
The government-sponsored enterprise released the results of its latest Home Purchase Sentiment Index (HPSI), which decreased 2.5 points to an all-time low of 69.4 in May.
“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan commented.
Just 14% of consumers indicated that it’s a good time to buy a home, down from 20% the prior month. The share of those believing it’s a good time to sell fell from 67% to 64%. The majority of survey respondents also said they expect affordability to remain tight for the foreseeable future, with home prices and mortgage rates continuing to rise over the next year.
Last week, Redfin published survey results showing young adults favor housing affordability more than any other issue when it comes to their vote in this November's presidential election. Millennials, Gen Xers, and baby boomers surveyed all rated the strength of the overall economy as the most important factor in their presidential pick. Gen Xers and baby boomers also ranked preserving democracy above housing affordability.
On a more positive note, a growing share of Fannie Mae's respondents, now 20%, indicated that their household income is significantly higher than it was a year ago.
“While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability,” Duncan pointed out.
In April, the last month for which data is available, the national median mortgage payment increased to $2,256 from $2,201 in March, according to the Mortgage Bankers Association's (MBA) monthly Purchase Applications Payment Index (PAPI). The month-over-month rise in April represented a 6.8% increase from April 2023.
“This is most clearly evidenced by our ‘good time to buy’ component falling to a new survey low this month," Duncan added. "On the other hand, homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months. This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future. As our latest forecast notes, we expect improvements to housing inventory will lead to slightly increased sales activity through the end of the year."
