Pessimism about the housing market grew in September

Amid record-breaking property home price growth, the Fannie Mae Home Purchase Sentiment Index continued its downward trend in September.

The overall HPSI score dipped to 74.5 from 75.7 in August and 81 in Sept. 2020. The share of consumers who felt it was a good time to buy a home dropped to 28% from 32% in August and 54% from one year earlier. It also matched the survey’s all-time low point from July.

While ‘exhausting’ rates of home price growth keep setting new records, only a net 13% of borrowers expect them to rise over the next year, down from 16% month-over-month and 24% year-over-year. Consumers may be betting on appreciation hitting an inflection point but they could be wrong, according to Fannie Mae Chief Economist and SVP Doug Duncan.

“In our view, other housing market fundamentals remain supportive of further home price appreciation — including low levels of inventory and low interest rates,” Duncan said in the report.

Freddie Mac’s average 30-year fixed-rate mortgage fell to 2.99% for the week ending Oct. 7. A net 43% predicted increasing mortgage rates over the next year, down from 47% in August and up from 27% a year ago.

Active listings reached a 2021 peak in September but they still sat 22.2% below 2020’s level, according to the latest data from Realtor.com.

New-listing volume dropped 10% annually in September and hurt the market’s lower price tiers most, according to a separate report from HouseCanary. New single-family listings fell 27.1% year-over-year in the $0-to-$200,000 price range and 18.6% between $200,000 and $400,000. Meanwhile, they grew 0.7% from $400,000 and $600,000 and 3.1% between $600,000 and $1 million.

“We continue to see prospective buyers making above-list price offers on homes given the ultra-competitive market environment,” said Jeremy Sicklick, HouseCanary co-founder and CEO. “If the supply shortage holds through the winter, we could expect to see additional rapid price growth in spring 2022, but at a lower rate compared to 2021."

On the flip side, sellers rejoiced in Fannie Mae’s Home Purchase Sentiment Index. Constrained supply and price gains led 74% of HPSI surveyees to believe September was a good time to sell a home, up from 73% in August and 56% in September 2020.

The net share of consumers unconcerned about losing their jobs ticked down to 65% from 67% in both August and the year prior. A net 14% reported significantly higher household income over the past year, holding month-over-month and doubling from 7% annually.