Consumers’ increased confidence regarding their personal financial situations was largely offset by further negativity toward home buying conditions in July, according to the Fannie Mae Home Purchase Sentiment Index (HPSI). The HPSI increased in July by 0.8 points to 66.8. Month over month, three of the HPSI’s six components increased, including job security and home price expectations, while the full index is up 4 points year over year.
Up from 78% in June, 82% of consumers said it’s a bad time to buy a home, while 18% said it’s a good time to buy, a decrease from 22% in June. Month over month, the net share of those who said it’s a good time to buy decreased 8 percentage points. The percentage who said it’s a good time to sell remained unchanged at 64%, and, likewise, those who said it’s a bad time to sell stayed at 36%.
“Unsurprisingly, consumers continue to attribute the challenging conditions to high home prices and unfavorable mortgage rates. Further, the share of consumers expecting home prices to continue to rise has also been on a steady climb since March, which may only add to perceptions of unaffordability,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “Additionally, we have not seen much movement in the ‘good time to sell’ component over the last few months, an indication that the current low levels of existing homes for sale will likely continue to persist in the near term, as also reflected in our latest forecast.”
Respondents who said home prices will go up in the next 12 months increased from 36% to 41%, and the percentage who said prices will go down decreased from 26% to 24%. Those who think home prices will stay the same decreased from 37% to 34%, resulting in the net share of those who said home prices will go up in the next 12 months increasing 6 percentage points month over month.
Unchanged from June, 16% of respondents said mortgage rates will go down in the next 12 months, while respondents who expect mortgage rates to go up decreased from 47% to 45% and the share who think rates will stay the same increased from 36% to 38%. Month over month, the net share of those who said mortgage rates will go down over the next 12 months increased 3 percentage points.
“While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability,” adds Duncan. “In July, a significant majority of consumers indicated that their jobs are stable and that their incomes are the same or better than they were 12 months ago.”
The percentage of respondents who said they are not concerned about losing their job in the next 12 months increased from 77% to 80%. Respondents who said they are concerned decreased 2 percentage points from 22% to 20%. The net share of those who said they are not concerned about losing their job increased 6 percentage points month over month.
For household income, the percentage of respondents who said it is significantly higher than it was 12 months ago remained unchanged at 19%, while the percentage who said their household income is significantly lower or about the same also remained unchanged at 10% and 71%, respectively.