Frustrations mount with the housing market
Consumers’ sentiment toward the US housing market continued to sour in July, as an overall lack of affordability weighed on homebuying attitudes, Fannie Mae said.
Fannie’s latest Home Purchase Sentiment Index (HPSI) decreased 1.1 points in July to 71.5, though it remained up 4.7 points compared to the same time last year.
“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,” Fannie Mae chief economist Doug Duncan said in the HPSI report.
The share of respondents who said it’s a good time to buy a home decreased from 19% to 17%, while the percentage who said it’s a bad time to buy increased from 81% to 82%.
Meanwhile, the net share of those who say it’s a good time to sell a home decreased 2% month over month to 65%.
“Our recently published Mortgage Understanding Study reaffirmed what we’ve long known: that a significant majority of consumers want to own a home,” said Duncan. “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.”
Consumer expectations for home prices and mortgage rates also continue to reflect the ongoing affordability challenges. The net share of those who say home prices will rise over the next 12 months decreased seven percentage points, while the net share who expect mortgage rates to decline increased five percentage points.
“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,” Duncan added.
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Fannie Mae expects home price growth to decelerate through next year and mortgage rates to average 6.2% by the fourth quarter of 2025.
One emerging trend that bears watching, according to Duncan, is the slowly rising share of respondents who say they would rent, rather than buy, on their next move.
He said it’s unclear if this reflects “simple buyer fatigue or a greater sense of disenchantment with the market,” but could have important implications if the trend continues.
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