Consumers continued to have a mostly negative view of the housing market in May, with only 14% saying it’s a good time to buy a home, down from 20% in April, according to Fannie Mae’s Home Purchase Sentiment Index (HPSI).
What’s more, the percentage of survey respondents who say it is a good time to sell a home decreased to 64%, down from from 67% in April, while the percentage who say it is a bad time to sell increased to 35%, up from from 32% the previous month.
Meanwhile, consumers continue to believe affordability will remain tight for the foreseeable future, as respondents believe that, on net, home prices and mortgage rates will go up over the next year.
Among the positives from the survey: A growing share of respondents, now 20%, indicated that their household income is significantly higher than it was a year ago.
“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” says Doug Duncan, senior vice president and chief economist for Fannie Mae, in a statement. “While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability.”
“This is most clearly evidenced by our ‘good time to buy’ component falling to a new survey low this month,” Duncan adds. “On the other hand, homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months. This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future. As our latest forecast notes, we expect improvements to housing inventory will lead to slightly increased sales activity through the end of the year.”
Photo: Janosch Diggelmann