The rapid rise in home prices is resulting in a divergence in consumer attitudes toward buying and selling a home, Fannie Mae’s Home Purchase Sentiment Index for May shows.
The net share of respondents who reported that now is a good time to sell a home increased to 46% and is now up 14 percentage points year over year.
However, the net share who said now is a good time to buy a home decreased to 28%, showing little improvement year over year.
Overall, the index rose 0.6 points to a score of 92.3. a new all-time survey high for the second consecutive month.
The net share of consumers who said home prices will go up in the next 12 months remained unchanged at 49%.
The net share who expect mortgage rates to go down over the next 12 months fell one percentage point.
In addition, more Americans reported improved job confidence in May – as well as an increase in household income over the previous 12 months.
However, the share of consumers who expect their personal financial situation to improve within the next year fell six percentage points to 48%, and those who expect it to stay the same rose six percentage points to 40%.
Doug Duncan, senior vice president and chief economist at Fannie Mae, says the overall increase in May was mainly due to “a fresh record high in the net share of consumers who say it’s a good time to sell a home.”
“However, the perception of high home prices that underlies this optimism cuts both ways, boosting not only the good-time-to-sell sentiment but also the view that it’s a bad time to buy, and presenting a potential dilemma for repeat buyers,” Duncan says in a release. “For the survey’s renter respondents, who are unable to reap benefits from selling a home, the [index] has been essentially flat in the first quarter, during which home sales were also lackluster.”
According to Fannie Mae’s latest Mortgage Lender Sentiment Survey, which is expected to be released on Tuesday, “lenders expect mortgage demand to soften in the near term,” Duncan says.
