Seasonal jump in housing interest reverses

While there was promising improvement in consumer attitudes earlier in the spring home buying season, purchasers became a little less enthusiastic in May, according to Fannie Mae.

That put a little bit of a drag on Fannie's Home Purchase Sentiment Index, a monthly house market measure produced by the government-related mortgage investor.

The index reading inched back to 65.6 during the month from 66.8 in April, when it experienced the biggest one-month jump in two years.

A larger share of respondents to Fannie's survey were optimistic about selling in May at 65% compared to 62% the previous month, but the percentage of people enthusiastic about buying fell to 19% from 23% during the same time period.

Fannie Mae attributed the shift to the perception that financing costs and home prices are relatively high.

"As we near the end of the spring home buying season, the latest HPSI results indicate that affordability hurdles, including high home prices and mortgage rates, remain top of mind for consumers," said Mark Palim, vice president and deputy chief economist, in a press release.

Although consumers in Fannie's survey have been worried about housing costs, a recent study by credit reporting agency TransUnion suggests the public's optimism about personal finances is at a six-year high, with 57% of respondents feeling good about their money situation.

However, 75% are expecting a recession to arrive late this year, in line with some recent forecasts.

TransUnion traces these conflicting attitudes back to the fact that while many consumers feel good about overall employment levels in the United States, there is also a lot of concern that inflation is outpacing wages and housing costs are high.

Some of that has to do with subjective views of financing costs, which became more normalized in 2022 after years of being unusually low, according to Charlie Wise, senior vice president, head of global research and consulting at TransUnion.

"We are living in uncharted territory from a consumer credit perspective," he said in a press release. "Rising interest rates and elevated inflation, while not uncommon from a historical perspective, is an unfamiliar experience for many."

Wise added this was "likely why a number of people are expressing that they feel they are in a personal recession or soon will be in one."

Gen Z was most worried about housing costs from a rent or mortgage standpoint in the quarterly survey TransUnion conducted between April 25 and May 9. The generational breakdown of concern was: Z, 53%; millennials, 40%; X, 35%; baby boomers, 14%.