More than three quarters of consumers surveyed in Fannie Mae’s October Home Purchase Sentiment Index think the U.S. economy is on the “wrong track,” up 7 percentage points from September, with the vast majority once again pointing to inflation as the top reason for that belief.
In addition, 85% of consumers said it was a “bad time” to buy a home, with most respondents citing high home prices and high mortgage rates as the primary reasons.
“Consumers expressed even greater pessimism toward the larger economy this month, in addition to their ongoing frustration with the housing market,” says Doug Duncan, senior vice president and chief economist for Fannie Mae, in a statement. “Across all income groups, inflation has consistently driven the ‘wrong track’ belief since the end of last year, suggesting consumers are fed up with the high prices of many goods and services.
“Although the labor market is strong and wages have risen in the past year, consumers may believe that their purchasing power has not kept up with prices, as 69 percent of consumers say their incomes are ‘about the same’ compared to the previous year,” Duncan says. “We expect this tightness in household finances, along with high home prices and elevated mortgage rates, to prolong the affordability challenges facing many would-be homebuyers.”
Overall, the full index is up 8.2 points from its all-time low last year.
The percentage of respondents who say it is a good time to sell a home remained unchanged at 63%, while the percentage who say it’s a bad time to sell remained unchanged at 37%. As a result, the net share of those who say it is a good time to sell remained unchanged month over month.
The percentage who say home prices will go up in the next 12 months decreased from 42% to 40%, while the percentage who say home prices will go down remained unchanged at 23%. The share who home prices will stay the same increased from 35% to 36%.
The percentage who say mortgage rates will go down in the next 12 months decreased from 17% to 16%, while the percentage who expect mortgage rates to go up increased from 46% to 47%. The share who think mortgage rates will stay the same decreased from 37% to 36%.
The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 75% to 78%, while the percentage who say they are concerned decreased from 23% to 21%.
The percentage who say their household income is significantly higher than it was 12 months ago increased from 18% to 20%, while the percentage who say their household income is significantly lower decreased from 13% to 10%. The percentage who say their household income is about the same increased from 68% to 69%.
Photo: Marten Bjork