Consumers focus on selling as affordability concerns persist for buyers
The housing market sentiment remained clouded as many would-be buyers and sellers are still in a “wait and see” phase, according to Fannie Mae’s latest Home Purchase Sentiment Index (HPSI) latest data.
The HPSI remained flat at 71.9 in April, unchanged from March. However, the index was up 5.1 points from last year.
Fannie Mae chief economist Doug Duncan (pictured) said the flat reading suggests consumers are taking a “wait and see” approach amid ongoing affordability challenges.
“Housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would move lower,” he said in the report. “However, recent data showing stickier-than-expected inflation, rising mortgage rates, and continued home price appreciation appear to have given consumers pause regarding the market’s direction.”
While 67% of consumers surveyed said they believe it’s a good time to sell a home - up 10 percentage points since the end of 2023 - only 20% felt it was a good time to buy, an increase of just three points over the same period. This divergence comes amid the steady upward march of mortgage rates.
Read more: When is the best time of year to sell a home?
The share of respondents expecting mortgage rates to decline over the next 12 months fell to just 26% in April. On the other hand, 42% anticipate home prices will continue rising, up from 40% in March.
“We think consumers’ generally improved sense of home-selling conditions bodes well for listings and housing activity, particularly for the segment of the population who may need to move for lifestyle reasons and have already begun adjusting their financial expectations to the current mortgage rate and price environment,” Duncan said.
However, Duncan cautioned that the affordability challenges will likely keep many prospective buyers on the sidelines for now.
“For potential homebuyers in less of a rush to transact, ongoing affordability challenges may continue to keep many of them on the sidelines – one reason why we expect home sales to tick up only gradually over the course of the year,” he added.
Other HPSI components showed slightly elevated concerns over job security and household income compared to March. The percentage saying they are not concerned about losing their job in the next 12 months dipped to 76% from 77%, while 17% said their household income is significantly higher than a year ago, down from 19%.
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