In October, the Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 4.1 points to 56.7, an all-time low since the index’s inception in 2011. The full index is down 18.8 points year over year. Also a new survey low, only 16% of respondents said that now is a good time to buy a home, while the percentage who believe now is a good time to sell decreased abruptly from 59% to 51% in October.
Those who said they believe it’s a bad time to buy increased from 75% to 80%, resulting in the net share of those who said it is a good time to buy decreasing 8 percentage points month over month. For those who believe it’s a bad time to sell, the percentage increased from 33% to 42%, resulting in a net share of those who said it is a good time to sell decreasing 17 percentage points month over month.
Including the good and bad time to buy or sell components, five out of the six components decreased month over month including home price expectations and mortgage rate expectations. Fueling consumers’ housing affordability concerns, respondents who said mortgage rates will go down in the next 12 months decreased from 9% to 6% as the percentage who expects rates to go up increased from 64% to 65%.
Those who think mortgage rates will remain the same increased to 24% from 20%, resulting in a net share of those who said mortgage rates will go down over the next 12 months decreasing 4 percentage points month over month.
“The HPSI reached an all-time survey low this month, in line with expectations that the housing market will continue to cool in the months ahead. Consumers are increasingly pessimistic about both home buying and home-selling conditions. Amid persistently high home prices and unfavorable mortgage rates, the ‘bad time to buy’ component increased to a new survey high this month, while the ‘good time to sell’ component continued its downward trend,” says Doug Duncan, Fannie Mae senior vice president and chief economist.
“Consumers also remain concerned about the movement of home prices—expectations that prices will decrease reached a new survey high, particularly among homeowners—offering further support to our forecast of home price declines in 2023. As continued affordability constraints reduce home buyer demand, and homeowners become reluctant to sell at potentially reduced prices, we expect home sales to slow even further in the coming months, consistent with our forecast.”
Respondents who said home prices will go up in the next 12 months decreased from 32% to 30%, as those who said they think home prices will go down increased from 35% to 37%. The percentage who believes home prices will stay the same decreased to 26% from 28%. The net share of respondents who said home prices will go up decreased 4 percentage points month over month.
The household income component saw a 5 percentage point decrease month over month as those who said their household income is significantly higher than it was 12 months ago decreased from 26% to 25% and those who said their household income is significantly lower increased from 11% to 15%. Those who reported income staying the same decreased to 60% from 61%.
The only increase, job loss concern saw a net share of respondents who are not concerned about losing their job increase 13 percentage points month over month; those who are not concerned increased from 78% to 85%, and those who are concerned decreased from 21% to 15%.
