The Fannie Mae Home Purchase Sentiment Index (HPSI) increased 0.6 points in November to 57.3 – its first increase in nine months, though it remains just above the all-time low set last month and significantly lower than its level at this time last year.
Four of the index’s six components increased modestly month over month, including those associated with homebuying and home-selling conditions; however, both remain well below year-ago levels, having declined on net 28 and 38 points, respectively.
Elevated mortgage rates continue to constrain affordability, and 62 percent of respondents expect mortgage rates to rise even further over the next year, compared to only 10 percent who expect rates to decline.
Year over year, the full index is down 17.4 points.
“Both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated,” says Doug Duncan, Fannie Mae’s senior vice president and chief economist.
“Consumers continue to expect mortgage rates to rise but home prices to decline – a situation that we believe will contribute to a further slowing of home sales in the coming months, as both homebuyers and home-sellers have reason for apprehension,” he adds. “We expect mortgage demand to continue to be curtailed by affordability constraints, while homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”
The percentage of respondents who say it is a good time to buy a home remained unchanged at 16%, while the percentage who say it is a bad time to buy decreased from 80% to 79%. On the flip side, the percentage who say it is a good time to sell increased from 51% to 54%, while the percentage who say it’s a bad time to sell decreased from 42% to 39%.
The percentage of respondents who say home prices will go up in the next 12 months remained unchanged at 30%, while the percentage who say home prices will go down decreased from 37% to 34%.
The share who think home prices will stay the same increased from 26% to 30%; meanwhile, the percentage who expect mortgage rates to go up decreased from 65% to 62%.