Fannie Mae survey signals tough times for homebuyers
Consumer sentiment in the housing market remained grim in October, with the Fannie Mae Home Purchase Sentiment Index (HPSI) showing only a slight change despite some improvement in job security and household income.
The index, a measure of the public’s perspective toward home buying and selling, ticked up 0.4 points to 64.9 last month but remained clouded by the belief of 78% of respondents that the economy is on the “wrong track” – with inflation cited as the main concern.
Fannie Mae chief economist Doug Duncan commented on the findings: “Consumers expressed even greater pessimism toward the larger economy this month, in addition to their ongoing frustration with the housing market.”
He pointed out that inflation has been a consistent factor in the public’s negative outlook since last year, impacting purchasing power despite wage increases and a strong labor market.
“Across all income groups, inflation has consistently driven the ‘wrong track’ belief since the end of last year, suggesting consumers are fed up with the high prices of many goods and services,” Duncan said in Fannie’s news release. “Although the labor market is strong and wages have risen in the past year, consumers may believe that their purchasing power has not kept up with prices, as 69% of consumers say their incomes are ‘about the same’ compared to the previous year. We expect this tightness in household finances, along with high home prices and elevated mortgage rates, to prolong the affordability challenges facing many would-be homebuyers.”
Highlights from the HPSI components reveal:
- A record 85% of consumers believe it is a “bad time” to buy a home, mainly due to high home prices and mortgage rates.
- The sentiment on selling homes remained steady, with 63% stating it’s a good time to sell and 37% disagreeing.
- Expectations for home prices show a slight decline, with 40% anticipating an increase in the next 12 months, down from 42%.
- Prospects for mortgage rates worsened slightly, with 47% expecting a rise.
- Job security sentiment improved, with 78% not worried about losing their job, up from 75%.
- Household income perspectives were slightly more positive, with 20% reporting a significant increase from the previous year.
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