The high level of demand in the housing market made both buyers and sellers pessimistic about their prospects according to the latest Fannie Mae Home Purchase Sentiment Index.
The share of borrowers who thought July was a good time to buy a home dropped to yet another new all-time low of 28% from 32% in June and from 53% one year earlier. A 66% share said it was a bad time to buy, dropping the net percentage to -38% from June’s -32% and July 2020’s 15% a year ago.
The continued rise in listing prices pushed a rising number of otherwise willing buyers to the sidelines.
“Historically prime home buying groups appear to be increasingly sensitive to the lack of affordability, as home prices continue to increase and homes for sale remain in short supply,” Doug Duncan, Fannie Mae SVP and chief economist, said in the report. “While all surveyed consumer segments reported increased pessimism toward home buying conditions over the past several months, two of the segments perhaps best positioned to purchase — consumers aged 35 to 44 and those with middle-to-higher income levels — have indicated even more pessimism.”
Despite the heavily favorable environment for those looking to part with their homes, seller optimism waned in the short term as well. Three quarters of respondents said July was a good time to sell, down from 77% in June but was up from 45% annually. The net positive of 55% fell from 62% in June and shot up from -3% year-over-year.
Slightly more consumers in July believed that the air will start coming out of the home price balloon at some point in the next year. A net 25% of those surveyed expected values to rise in the next 12 months, a decline from 27% month-over-month but an increase from 12% annually.
The overall home purchase sentiment score had its largest monthly movement since March, as it dropped to 75.8 from 79.7 in June and inched up from 74.2 in July 2020. A 71% net share of consumers weren’t concerned about job loss, down six percentage points monthly while jumping 18 percentage points annually.
Meanwhile, a net 13% reported significantly higher household income over the past 12 months, down a point from June and up seven points from a year ago. Lastly, a net 52% predicted that mortgage rates will increase over the next year, up from 49% in June and 19% a year earlier.
