Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased 3.9 points to 75.8 in July, with consumers continuing to report concerns related to high home prices and a lack of homes for sale.
While all six components of the HPSI declined month over month, the “Good Time to Buy” and “Good Time to Sell” components produced the most notable results. On the buy side, 66% of respondents said it’s a bad time to buy a home, up from 64% last month. On the sell side, 75% of respondents said it’s a good time to sell, down slightly from 77% last month.
Year over year, the overall index is up 1.6 points.
“Historically prime home-buying groups appear to be increasingly sensitive to the lack of affordability, as home prices continue to increase and homes for sale remain in short supply,” says Doug Duncan, Fannie Mae’s senior vice president and chief economist. “While all surveyed consumer segments have reported increased pessimism toward homebuying conditions over the past several months, two of the segments perhaps best positioned to purchase – consumers aged 35-44 and those with middle-to-higher income levels – have indicated even more pessimism than other groups.
“Overall, the HPSI remains within a tight range established a few months after the onset of the pandemic in 2020,” Duncan continues. “Consumer sentiment toward home buying hit yet another survey low in July, continuing the sharp downward trend established in March. The percentage of respondents citing high home prices as the top reason for it being a ‘bad time to buy’ also reached an all-time high. On the flip side, selling sentiment remains extremely high, and well above pre-pandemic levels, for the same commonly cited reason: high home prices.”
The percentage of respondents who say it is a good time to buy a home decreased from 32% to 28%, while the percentage who say it is a bad time to buy increased from 64% to 66%. Those who say home prices will go up in the next 12 months decreased from 48% to 46%, while the percentage who say home prices will go down remained unchanged at 21%.
The share who think home prices will stay the same increased from 25% to 27%. The percentage of respondents who think that mortgage rates will go down in the next 12 months decreased from 6% to 5%, while the percentage who expect mortgage rates to go up remained unchanged at 57%. The share who believe mortgage rates will stay the same increased from 30% to 31%.
Those who say their household income is significantly higher than it was 12 months ago remained unchanged at 27%, while the percentage who say their household income is significantly lower increased from 13% to 14%. The percentage who say their household income is about the same remained unchanged at 56%.
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