Consumer confidence in the housing market dipped in July, due mainly to the rise of coronavirus infections in many parts of the country, including the south and southwest, according to Fannie Mae’s Home Purchase Sentiment Index.
Overall, the index decreased 2.3 points in July to a score 74.2, moderating slightly after two consecutive months of advances.
Three of the six HPSI components decreased month over month, with consumers reporting a significantly more pessimistic view of home buying conditions but a more optimistic view of home selling conditions.
Year over year, the HPSI is down 19.5 points.
The percentage of respondents who say it is a good time to buy a home decreased from 61% to 53%, while the percentage who say it is a bad time to buy increased from 27% to 38%, according to the monthly survey. As a result, the net share of Americans who say it is a good time to buy decreased 19 percentage points.
What’s more, the percentage of respondents who say it is a good time to sell a home increased from 41% to 45%, while the percentage who say it’s a bad time to sell remained unchanged at 48%. As a result, the net share of those who say it is a good time to sell increased four percentage points.
The percentage of respondents who say home prices will go up in the next 12 months increased from 34% to 35%, while the percentage who say home prices will go down decreased from 25% to 23%. The share who think home prices will stay the same increased from 31% to 34%. As a result, the net share of Americans who say home prices will go up increased three percentage points.
With mortgage rates already at historic lows, the net share of Americans who say mortgage rates will go down over the next 12 months decreased four percentage points.
With unemployment on the decline and the job market improving, the share who say they are not concerned about losing their job in the next 12 months increased from 74% to 76%, while the percentage who say they are concerned decreased from 26% to 23%. As a result, the net share of Americans who say they are not concerned about losing their job increased five percentage points.
Lastly, the net share of survey respondents who say their household income is significantly higher than it was 12 months ago decreased three percentage points.
“Following a partial recovery of the HPSI in the previous two months, consumer sentiment toward housing took a slight step back in July amid a rise in coronavirus infections across many parts of the country, including the south and southwest,” says Doug Duncan, senior vice president and chief economist for the MBA, in a statement. “Supply constraints appear to be applying upward pressure to consumers’ home price expectations, which in turn has contributed to both a sharp reversal in optimism about whether it is a good time to buy a home and further improvement in home-selling sentiment.
“The July survey was conducted as legislators considered the extension of several provisions in the CARES Act to support household incomes during the pandemic,” Duncan adds. “Not surprisingly – more than any other respondent groups – renters, 18-to-34-year olds, and households earning less than $100,000 think it’s a bad time to buy a home, which we believe suggests a less favorable outlook for first-time home buying activity. In the months ahead, we continue to expect consumer sentiment to be closely linked to the country’s progress in containing the spread of the virus.”