Consumer sentiment toward the housing market fell in December – down 2.7 points to a score of 83.5 on Fannie Mae’s Home Purchase Sentiment Index (HPSI).
The drop follows a slight increase in November but is in keeping with the downward trend seen throughout the year.
Most of the decrease can be attributed to a 12-percentage point drop in the net share of Americans who said it is a good time to buy a home. This component is down 13 percentage points from the same time last year.
The net share of Americans who said it is a good time to sell a home increased one percentage point compared with the previous month and increased two percentage points compared with the same time last year.
Respondents reporting significantly higher income over the past year fell five percentage points on net, erasing the previous month’s gains, while the net share expressing greater job confidence increased two percentage points.
The net share who expect home prices to go up fell two percentage points.
The net share who said they expect mortgage rates to go down remained unchanged compared with the previous month.
“Consumer attitudes regarding whether it’s a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a statement. “Although home price growth slowed in 2018, the cumulative impact of sustained, robust increases in home prices outpacing income growth likely helped drive the share of consumers citing high home prices as a primary reason for a bad time to buy a home to a survey high.
“Meanwhile, consumers’ views on the direction of the economy, a key support for housing market sentiment of late, has softened somewhat from its October high,” Duncan added. “Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability.”