Pandemic weakens consumers' outlook
As fears of a recession mount due to COVID-19, millions of Americans are on edge about job security concerns and worsening homebuying and homeselling conditions.
In March, Fannie Mae's Home Purchase Sentiment Index (HPSI) recorded a sharp 11.7 point, month-over-month decline to 80.8.
"Attitudes about the current home-selling environment deteriorated markedly, falling to their lowest level since January 2017," said Doug Duncan, senior vice president and chief economist at Fannie Mae.
The HPSI went down nine points year over year. The growing share of Americans who believed mortgage rates will continue to sink in the next 12 months most likely cushioned the homebuying environment from the decline, according to Duncan.
The percentage of those who thought mortgage rates would drop in the next 12 months grew 11 percentage points to 20%.
However, the net share of people who said it's a good time to buy a home fell to 56% in March, down seven percentage points. The net share of people who said it's a good time to sell also plunged, down 29 percentage points to 52%.
"A survey record one-month drop in optimism about the direction of the economy appears to have weakened consumers' views of both the current home-selling and homebuying environment," Duncan said.
The share of consumers who believe home prices will go up in the next 12 months shrank 22 percentage points to 39%.
The percentage of those who said they are not concerned about losing their job in the coming 12 months dropped by 18% to 77% in March.
Americans who reported significantly higher income compared to 12 months ago decreased five percentage points to 27%.
"When asked why it's a bad time to buy or sell a home, approximately 7% of consumers offered COVID-19 as an unprompted response, one of the highest percentages of non-standard answers in the survey's history," Duncan said. "We expect these developments to weigh heavily on housing activity during the spring/summer homebuying season."
