High rates and low affordability brought consumer housing sentiment near a decade low in June as overall economic pessimism is becoming widespread, according to the latest data from Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index, a measure of views and forward-looking expectations of housing market conditions based on consumer surveys, dropped to its lowest level since the first months of the coronavirus pandemic — and second lowest in a decade — last month. The HPSI dipped 3.4 points to 64.8 on a 100-point scale, a drop of 5% from May when the index posted a reading of 68.2. On a year-over-year basis, the index came in 19% lower from 79.7.
Views on
“In June, a survey-record 81% of consumers reported that the economy is on the wrong track, suggesting to us — and corroborated by other recently released consumer confidence measures — that people appear to be growing increasingly frustrated with inflation and the slowing economy,” said Doug Duncan, Fannie Mae senior vice president and chief economist, in a press release.
“This month’s HPSI reading reflects these macroeconomic and personal financial concerns, with housing sentiment additionally diminished by the recent rapid increases in mortgage rates,” he said.
In a housing market currently encountering the effects of
“Interestingly, consumers’ perceptions of home-selling conditions declined meaningfully in June, returning to pre-pandemic levels. This was particularly true for homeowner respondents,” Duncan said.
In another sign the market is trending away from sellers, the share of consumers who expect current home-price levels to go down grew to 27% from 23% in May, while the percentage anticipating costs to increase fell to 44% from 47%.
Meanwhile, on the buyer side, respondents indicating current purchase conditions were good increased to 20% from 17% month over month but was off from 32% in June 2021.
Mortgage rate movements are making it challenging for aspiring homeowners with
Of growing concern to many were macro trends surrounding household income and job outlook, which helped drive HPSI numbers down. Amid
A greater percentage also said they had concerns about their employment status over the next year, with the share worried about losing their job increasing to 21% from 16% a month earlier, the highest in 18 months, Duncan said.
Fannie Mae’s latest index echoes similar reports of consumer malaise coming from the University of Michigan’s
While Fannie Mae’s HPSI may point to a souring mood among consumers, it was not wholly unexpected, according to Duncan.
“As a whole, this month’s HPSI results are consistent with our