While the
An uptick in Fannie Mae's latest Home Purchase Sentiment Index came primarily from interest rate expectations, with a 10% surge in the share of consumers expecting them to decrease over the next 12 months. Between July and August, the percentage expressing that view increased from 29% to 39%. At the same time, the share that earlier thought rates would head upward fell, shrinking from 31% to 26%.
The overall net percentage bump in downward-rate sentiment was the largest in Fannie Mae survey history. The results are based on responses to its monthly national housing survey.
Thoughts
"On a national level, housing sentiment was largely unchanged in August despite some positive developments for affordability, including a meaningful decline in actual mortgage rates and an uptick in home listings in certain markets," said Mark Palim, Fannie Mae vice president and deputy chief economist, in a press release. Palim is set
Compared to a year ago, the HPSI showed a 5.2-point improvement from a reading of 66.9 in Aug. 2023,
The sideways movement of the index from month to month also occurred even though fewer people thought home prices would maintain their pace of increase over the next year. The share who said housing costs would rise dropped four percentage points from 41% to 37%. The portion of respondents who said they would fall grew by 4% from 21% to 25% between July and August for an 8% net change.
While the rate of rising prices has cooled from the rapid acceleration of a few years ago, aspiring homeowners
"Most consumers remain apprehensive about the housing market and continue to point to the lack of affordability and supply as the chief reasons for their pessimism," Palim said.
Such apprehension appeared in responses to questions about whether August represented a good time to buy. Seventeen percent of respondents called current conditions "good," the same share as in July. A far larger 83% share called it a bad time for home buying, nudging up from 82% a month earlier, but below the record 86% from earlier this year.
Views about selling also showed little change over the past two months, but deviations were apparent when comparing regional markets.
In August, 56% of survey respondents from the South indicated that it was a "good time to sell," a decrease of 5 percentage points from July. The South was the only region to register lower selling sentiment, with the share from the Northeast, Midwest and West all reporting monthly increases to 80%, 70% and 66%, respectively.
"This likely reflects in part the wide geographic variation in new-home construction activity. In the regions that had a stronger construction response following the pandemic; our latest survey data suggest that sellers may be losing some of their negotiating power due to the increased supply," Palim said.
Nationwide, 65% of consumers fell in the "good time to sell" camp, while 34% said it was bad, both unchanged from July.
Elsewhere in Fannie Mae's findings, fears of job loss had little impact on changes in sentiment, with 78% not concerned about the prospect. The share grew one percentage point from July.
Household income concerns, though, could be showing slight signs of potential stress down the road for the housing market. The percentage of households who said their income was significantly lower last month compared to a year ago climbed from 11% to 14%. Likewise, consumers who reported significantly higher income growth year over year, inched down from an 18% share to 17%.
