The Fannie Mae Home Purchase Sentiment Index (HPSI) remained mostly flat in June, increasing by only 0.4 points to 66.0, as difficult supply and affordability issues continue to weigh on the housing market.
While most of the HPSI’s six components were little changed month over month, survey respondents did report that homebuying conditions improved slightly in June compared to May. Even so, a significant majority of consumers continue to report that it’s a “bad time to buy” a home, as they have since mid-2021. The full index is up 1.2 points year over year.
“Confidence in the housing market appears to have plateaued at a relatively low level, suggesting that many consumers may be coming to terms with elevated mortgage rates and high home prices,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “Home prices continue to be supported by the tight supply of homes available for sale, and, compared to the end of last year, fewer respondents today believe home prices will decrease over the next 12 months.
“Additionally, consumers’ mortgage rate expectations have tempered,” he continues. “A larger share of respondents think mortgage rates will stay the same over the next year, whereas mid-to-late last year, most thought rates would continue going up. This seems to signal that consumers are adapting to the idea that higher mortgage rates will likely stick around for the foreseeable future. We continue to forecast home sales to slow in the second half of the year, compared to the first half, due to ongoing affordability constraints and lack of housing supply.”