Sentiment eroded despite positive views of the economy
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Consumers' home-purchase sentiment fell in October to its lowest level in a year after recording a survey high during the spring homebuying season, according to Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index slipped two points in October to 85.7. The index is up 0.5 points compared with the same time last year.
Fannie Mae Chief Economist Doug Duncan said that the decline was broad-based, noting that the net share of consumers who said it's a good time to buy a home posted the largest decrease.
"The further erosion of buying sentiment occurred despite generally positive views of the economy. Among those who said it's a good time to buy, 30% – a record high – cited favorable economic conditions as the reason,” Duncan said. “Meanwhile, the share of consumers who think the economy is on the right track continued to grow, reaching a new survey high. The contrast between the survey's findings of weak home buying sentiment and overall economic optimism mirrors what we're seeing in the broader economy. While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion."
Five of the six index components decreased in October. The net share of Americans who said it is a good time to buy a home fell five percentage points to 21%, and the net share who said it is a good time to sell a home fell three percentage points to 35%.
Meanwhile, the net share of survey respondents who expect home prices to go up fell two percentage points to 37%, and the net share who expect mortgage rates to go down fell one percentage point to -57%. Finally, the net share who are confident about not losing their job fell by one percentage point to 78%.
