The general lack of affordability is still holding down consumer sentiment toward the housing market, as evidenced by the July decline of 1.1 points in the Fannie Mae Home Purchase Sentiment Index (HPSI) to 71.5. This month, just 17% of consumers said they thought it was a good time to buy a house, down from 19% in June, and 66% said they thought it was a good time to sell.
While they have converged, the shares anticipating rising vs falling home prices over the next 12 months are still quite different, at 41% and 21%, respectively. Over the course of the next year, 29% of consumers anticipate a decrease in mortgage rates, while 31% anticipate an increase. Year over year, the entire index is up 4.7 points.
“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 Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “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. 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.”
Home Purchase Sentiment Index—Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased 1.1 points in July to 71.5. The HPSI is up 4.7 points compared to the same time last year.
- Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 19% to 17%, while the percentage who say it is a bad time to buy increased from 81% to 82%. As a result, the net share of those who say it is a good time to buy decreased 1 percentage point month over month.
- Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 66% to 65%, while the percentage who say it’s a bad time to sell increased from 33% to 34%. As a result, the net share of those who say it is a good time to sell decreased 2 percentage points month over month.
- Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 45% to 41%, while the percentage who say home prices will go down increased from 17% to 21%. The share who think home prices will stay the same increased from 36% to 37%. As a result, the net share of those who say home prices will go up in the next 12 months decreased 7 percentage points month over month.
- Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 24% to 29%, while the percentage who expect mortgage rates to go up decreased from 33% to 31%. The share who think mortgage rates will stay the same decreased from 42% to 38%. As a result, the net share of those who say mortgage rates will go down over the next 12 months increased 5 percentage points month over month.
- Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 79% to 77%, while the percentage who say they are concerned increased from 20% to 21%. As a result, the net share of those who say they are not concerned about losing their job decreased 3 percentage points month over month.
- Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 16% to 18%, while the percentage who say their household income is significantly lower increased from 10% to 11%. The percentage who say their household income is about the same decreased from 72% to 69%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 1 percentage point month over month.
Duncan continued: “We’re currently forecasting home price growth to decelerate through next year and mortgage rates to average 6.2% by Q4 of 2025—and, 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.”
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