Consumer Sentiment Toward Housing Market Crawled Up Slightly in June

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Consumer sentiment toward the housing market improved slightly in June but remained historically low as higher mortgage rates and soaring home prices continued to stagnate home sales.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased 3.2 points to a score of 72.6, rebounding from a dip that came in May.

As per the monthly survey, 19% of consumers say it’s a good time to buy a home, up from 14% in May, which represented a new survey low.

The share believing it’s a good time to sell also increased, rising from 64% to 66%.

Greater shares of consumers also indicated belief that home prices and mortgage rates would rise over the next 12 months.

Among the household finance components, the percentage of consumers expressing a sense of job security jumped to 79%, an increase of 4 percentage points compared to May.

“Affordability concerns remain the primary driver of consumer housing sentiment, even as the topline findings from our monthly survey showed a modest uptick in optimism on both homebuying and home-selling conditions,” says Mark Palim, vice president and deputy chief economist for Fannie Mae, in a statement. “If mortgage rates decline through the end of the year, as we currently forecast, we do think home sales activity will pick up, but progress on that front is likely to be slow due to the ongoing imbalance between supply and demand.

“A significant majority of consumers continue to tell us that it’s a ‘bad time’ to buy a home, and they’re also telling us that they expect both home prices and mortgage rates to move higher over the next 12 months,” Palim adds. “Taken together, in our view, this leaves little upside to overall sentiment until meaningful progress is made on affordability – most likely in the form of either lower rates or improved supply. Of course, the flip side to a difficult purchase market is an advantageous sales market, and respondents also maintained their position that it’s a generally good time to sell, pointing to high home prices as the primary reason.”

Photo: Roger Starnes Sr

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