Homebuying sentiment tumbles due to growing economic uncertainty

Housing sentiment fell 2.3 points in September after hitting a record high the month before.

The Fannie Mae Home Purchase Sentiment Index (HPSI) dropped to 91.5 points as economic uncertainty weighed down on people’s outlooks.

Fannie Mae reported an eight-percentage-point dip in the percentage of consumers who were confident about not losing their jobs, along with a seven-percentage-point drop in the share of people who believed home prices would go up.

Two components of the HPSI partially offset the declines. The "Good Time to Buy" and "Good Time to Sell" components posted three- and four-percentage-point increases, respectively.

"Views about the direction of the economy held relatively steady, and the share of respondents who say it's a good time to buy or sell a home rose slightly," said Doug Duncan, senior vice president and chief economist of Fannie Mae.  “However, consumers who are pessimistic about current housing market conditions are more likely to cite unfavorable economic conditions than the prior month. Job confidence remains high but still well shy of its July reading. Despite some added uncertainty, the September HPSI indicates continued strength in housing market attitudes and is consistent with recent data on housing activity."

Other highlights of the report were:

• The net share of Americans who say it is a good time to buy increased three percentage points to 28%
• The net share of those who say it is a good time to sell rose by four percentage points to 44%, the same level as July
• The net share of Americans who say home prices will go up fell seven percentage points to 29%, continuing the decline that started in June
• The net share of Americans who say mortgage rates will go down over the next 12 months fell six percentage points to -23%
• The net share of Americans who say they are not concerned about losing their job fell eight percentage points to 69%, continuing the decline from last month
• The net share of those who say their household income is significantly higher than it was 12 months ago remained the same at 21%