Despite an improving economy, consumer sentiment toward the housing market continued to fall in October, dropping 2.0 points to a score of 85.7 on Fannie Mae’s Home Purchase Sentiment Index.
Sentiment dropped in five of six categories measured in the monthly consumer survey.
The net share of respondents who say it is a good time to buy a home fell five percentage points from September, to 21%.
The net share who say it is a good time to sell a home fell three percentage points to 35%.
The share who say home prices will go up also fell – down two percentage points to 37%.
The share who say mortgage rates will go down over the next 12 months dropped one percentage point to -57%.
Interestingly, despite the strong job market, the share of Americans who say they are not concerned about losing their job fell one percentage point to 78%.
The share who say their household income is significantly higher than it was 12 months ago remained unchanged at 19%.
“After hitting a survey high during the spring home buying season, the [index] has trended downward, declining in October to its lowest level in a year,” says Doug Duncan, senior vice president and chief economist at Fannie Mae, in a statement. “While the October drop was broad-based – all but one of the six index components declined – the net share of consumers who said it’s a good time to buy a home posted the largest decrease, tying its second lowest reading in the survey’s history.”
What’s interesting is that consumer sentiment toward housing fell “despite generally positive views of the economy,” Duncan says.
“Among those who said it’s a good time to buy, 30 percent – a record high – cited favorable economic conditions as the reason,” he says. “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,” he adds. “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.”