The prospect of growing mortgage rates took a negative hit on consumer perception of home buying and selling during October, according to Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index rose year-over-year, going to 85.7 from 85.2. However, it hit the lowest point since last October and
The net percentage of consumers who believe mortgage rates will increase in the next 12 months jumped to 57% from 46% year-over-year, also inching up from 56% the month prior.
"After hitting a survey high during the spring home buying season, the HPSI has trended downward, declining in October to its lowest level in a year. While the October drop was broad-based — all but one of the six HPSI components declined — the net share of consumers who said it's a good time to buy a home posted the largest decrease, tying its second lowest reading in the survey's history," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release.
Conversely, 59% of respondents said the economy is on the right track, a rise from the 48% in October 2017 and up from 55% month-over-month. The only survey component not to fall from the month before was sentiment around household income. It remained at 19 points from September and gained five points from a year ago.
"The further erosion of buying sentiment occurred despite generally positive views of the economy. Meanwhile, the share of consumers who think the economy is on the right track continued to grow, reaching a new survey high," Duncan said.
"The contrast between the survey's findings of weak home buying sentiment and overall economic optimism mirrors what we're seeing in the broader economy. While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion."
