Consumer confidence in the housing market decreased slightly in July compared with June but was up 4.7 points compared with July 2023, as per Fannie Mae’s Home Purchase Sentiment Index (HPSI), a national monthly consumer survey.
The percentage of survey respondents who say it is a good time to buy a home decreased from 19% to 17%, while the percentage who say it is a bad time to buy increased from 81% to 82%. As a result, the net share of those who say it is a good time to buy decreased 1 percentage point month over month.
The percentage of respondents who say it is a good time to sell a home decreased from 66% to 65%, while the percentage who say it’s a bad time to sell increased from 33% to 34%. As a result, the net share of those who say it is a good time to sell decreased 2 percentage points month over month.
The 1.1 point decrease in July brings the total index score to 71.5.
“While we’re seeing signs that affordability may be improving in certain parts of the country as supply slowly comes online, household incomes remain stretched relative to would-be mortgage or rent payments, and our latest survey once again reflects real consumer frustration with the housing market,” says Doug Duncan, senior vice president and chief economist, Fannie Mae, in a statement. “Our recently published Mortgage Understanding Study reaffirmed what we’ve long known: that a significant majority of consumers want to own a home.
“However, 82 percent told us in July that it’s a ‘bad time’ to buy, a share that’s remained consistent since January 2023, and these particular respondents continue to point to elevated prices and mortgage rates as the primary reasons for that belief,” Duncan says. “Meanwhile, there seems to be little expectation among the general population that homebuying conditions will improve in the near future: More consumers than not see home prices rising further; and slightly more consumers think mortgage rates will increase, rather than decrease, over the next 12 months.
“We’re currently forecasting home price growth to decelerate through next year and mortgage rates to average 6.2 percent by the fourth quarter of 2025 – and, like consumers, we continue to view affordability as the primary constraint to home sales activity,” he adds. “One data point we think bears monitoring: The share of respondents who say they would rent, rather than buy, on their next move has been trending slowly upward of late. Right now, it’s difficult to tell if this reflects simple buyer fatigue or a greater sense of disenchantment with the market, but we think it could have important implications should the trend continue.”
The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 79% to 77%, while the percentage who say they are concerned increased from 20% to 21%. As a result, the net share of those who say they are not concerned about losing their job decreased 3 percentage points month over month.
The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 16% to 18%, while the percentage who say their household income is significantly lower increased from 10% to 11%. The percentage who say their household income is about the same decreased from 72% to 69%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 1 percentage point month over month.
Photo: Daniel Svoboda