Rising home prices are chipping away at consumer confidence in the housing market, Fannie Mae’s Home Purchase Sentiment Index shows.
The index fell in July for the second consecutive month, dropping 4.2 points to a score of 86.5.
The dip, however, follows survey highs in April and May.
The share of survey respondents who said now is a good time to buy a home fell four percentage points compared with June, while the share who said it is a good time to sell fell six percentage points.
Additionally, the share who said that home prices will go up in the next 12 months decreased seven percentage points compared with the previous month.
More Americans also expressed a decreased sense of job security; the share who said they are not concerned about losing their job fell 11 percentage points in July.
“Home purchase sentiment seems to have reached a plateau, with potential home sellers likely struggling to find a home to buy amid slow supply growth, expectations for rising mortgage rates, and significant home price increases,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “Survey respondents cite ‘high home prices’ as the top reason why it is both a good time to sell a home and bad time to buy a home. This suggests a contributing factor to the low supply of existing homes for sale is that current owners are reluctant to trade up in a rising price market. Additionally, the shares of consumers citing favorable mortgage rates as a reason why it’s a good time to buy or sell a home both dropped to fresh survey lows.”
The net share of those who said their household income was significantly higher than it was 12 months earlier rose two percentage points to 21%, matching the survey high from May.