The extreme housing supply scarcity kept competition fierce and prices high, souring consumers on the purchase market in April.
Fannie Mae’s Home Purchase Sentiment Index fell to 79 from 81.7 in March while remaining above the score of 63 logged during the first full month of the coronavirus lockdowns one year ago. Four of the six index components dropped month-over-month, with pessimism regarding buying conditions outweighing optimism for the first time in the survey’s 10-year history.
A 47% share of consumers said April was a good time to buy a home, while 48% said it was a bad time. That net -1% for April marked a decrease of 14 percentage points from March and three percentage points year-over-year. Even potential buyers with boosted savings from stimulus payments are likely trying and failing to buy a home in the current environment, said Fannie Mae SVP and chief economist Doug Duncan.
“Notably, consumers in the household income range of $50,000 to $100,000 showed a particularly large decrease in overall housing sentiment, and we know that the housing market serving the affordable segment has been particularly competitive,” Duncan said in the report.
However, those constraints for buyers pulled selling sentiment in the opposite direction with 67% saying it was a good time to sell compared to 26% who said it wasn’t. The net positive 41% increased from 33% in March and from -36% in April 2020.
“As has become standard discourse in the housing industry recently, increasing the supply of homes for sale would certainly help bring balance to this strong seller’s market, but unfortunately the most recent data doesn’t suggest that inventory is likely to improve in the near future,” Duncan continued.
A net 32% of consumers expect home prices to rise in the next 12 months, a decline from 36% in March but a big jump from -11% the year before. Job loss concern dipped a percentage point month-to-month to a net 64% who were not concerned. Significantly higher changes in household income from the past 12 months fell to a net share of 4%, down from 10% monthly and up from -1% annually.
Lastly, 54% anticipate mortgage rate growth in the next year, holding flat from March while rising from 33% in April 2020.
