Share of consumers who think it's a bad time to enter the market hit a new survey high
The possibility of an 8% mortgage rate has cast a dark cloud over the already-pessimistic consumer housing outlook.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) dropped to a reading of 64.5 in September, down 2.4 points from August and 3.7 points from a year ago.
“Mortgage rates persistently over 7% appear to be deepening the malaise consumers feel about the home purchase market,” said Fannie Mae chief economist Doug Duncan. “In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first.”
With the 30-year fixed-rate mortgage averaging 7.49%, Duncan noted that the share of consumers expressing pessimism about homebuying conditions reached a new survey high in September, with 84% indicating that it’s a bad time to buy a home.
“On the sell side, respondents also listed unfavorable mortgage rates as the top reason why they believe it’s a bad time to sell a home,” he added, pointing out that 37% of Americans now believe it’s a bad time to sell.
“This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon, but it also may reflect the worry of some homeowners that sale values might be suppressed slightly if the pool of qualified homebuyers is constrained by elevated mortgage rates.”
Only 17% of respondents expect mortgage rates to go down, and those who anticipate a slowdown in home price growth decreased to 23%, according to Fannie’s report.
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“Consumers are also not seeing much affordability relief in sight, as they continue to expect home prices to increase in the next 12 months,” Duncan said. “They also indicated that their personal economic situations are showing signs of strain, including lower year-over-year household incomes and a reduced sense of job security. In our view, all of this points to home purchase affordability remaining a problem for the foreseeable future, which we forecast will keep home sales sluggish into next year.”
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