The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 1.5 percentage points in July to 86.8, after matching its all-time high in June.
The company says the decline can be attributed to decreases in three of the six HPSI components. The net share who reported that now is a good time to buy a home fell 7 percentage points, with the share who say it’s a bad time to buy reaching a new survey high and the share who say it’s a good time to buy reaching a new survey low.
The net share of those who say it is a good time to sell a home decreased by 11 percentage points, following June’s survey high. Americans also expressed a greater sense of job security, with the net share who say they are not concerned about losing their job rising by 9 percentage points.
Additionally, consumers continued to express that their current household income is not significantly higher than it was 12 months ago, with that component falling an additional percentage point in July. Finally, the net share of Americans who expect home prices to go up also increased by 1 percentage point this month, following last month’s upward trend.
The decline in selling sentiment was the biggest drag on the index, followed by the drop in buying sentiment. Underlying data showed that economic conditions weighed on the former. Among consumers who believe now is a bad time to sell, the share citing economic conditions as a primary reason posted a sharp rise. Nearly half of consumers who say now is a bad time to buy cited rising prices as a primary concern – a survey high.
“It’s clear that high home prices are a growing challenge helping to send buying sentiment to a record low,” says Doug Duncan, senior vice president and chief economist at Fannie Mae.
“However, we find the notable decline in selling sentiment surprising,” he adds. “If it persists, this month’s decrease in optimism regarding the direction of the economy, which appears to coincide with rising uncertainty regarding the outlook for pro-growth legislation this year, could weigh on overall housing sentiment in the second half of the year.”