Affordability constraints and concerns continued to color consumer perceptions of home buying and selling conditions in May. Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased by 1.2 points to 65.6 last month. The index is 2.6 points lower than in May 2022.
“As we near the end of the spring home buying season, the latest HPSI results indicate that affordability hurdles, including high home prices and mortgage rates, remain top of mind for consumers, most of whom continue to tell us that it’s a bad time to buy a home but a good time to sell one,” says Fannie Mae vice president and deputy chief economist Mark Palim.
Four of the HPSI’s six components decreased month over month, with the share of respondents believing it is a “good time to buy” nearing a survey low (19%). However, the share of respondents who indicated it is a “good time to sell” increased 3 percentage points to 65%, the highest level since July 2022, according to Fannie Mae. For the second consecutive month, the survey results indicated a greater share of consumers expect prices to increase rather than decrease over the next year.
“Consumers also indicated that they don’t expect these affordability constraints to improve in the near future, with significant majorities thinking that both home prices and mortgage rates will either increase or remain the same over the next year,” says Palim. “Notably, the same factors impacting affordability may also be affecting the perceived ease of getting a mortgage. This was particularly true among renters: 81% believe it would be difficult to get a mortgage today, matching a survey high.”
On a holistic basis, the net share of respondents who say it is a good time to buy a home decreased 7 percentage points month over month, while the net share of those who say it is a good time to sell increased 8 percentage points. Thirty-nine percent of respondents believe prices will go up over the next 12 months compared with just 28% who believe prices will go down.
The percentage of respondents who believe mortgage rates will go up over the next 12 months increased 3 percentage points to 50%, while the share who believe rates will go down decreased 3 percentage points to 19%.
The net share of those who are not concerned about losing their job in the next 12 months decreased 3 percentage points month over month, and the net share of respondents who say their household income is significantly higher than 12 months ago decreased 5 percentage points.
The HPSI combines information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey into a single number. The HPSI reflects current and forward-looking expectations of housing market conditions and complements existing data sources.
