According to the Fannie Maes Home Purchase Sentiment Index (HPSI), consumers reported a more pessimistic view of home purchase conditions in May for the second consecutive month.
Although the index rose one point to 80 month-on-month, the proportion of consumers who believe it’s a good time to buy a home has fallen from 54% in April to just 35% in May. The upward trend in overall sentiment, said Fannie Mae chief economist Doug Duncan (pictured), was driven by improvements in components related to personal finance, “with consumers being far more positive about their jobs and income.”
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The net share of consumers who said they didn’t worry about losing their job in the next 12 months rose 11 percentage points to 87%. Meanwhile, those who said their household income was significantly higher than it was twelve months ago rose 12 percentage points to 29% in May.
“The good time to buy component continued to decline – and hit another all-time low – as consumers seem to be aware of higher home prices and low home supply, the two most cited reasons for this sentiment,” said Duncan .
Despite tough housing market conditions, Duncan said home buyers are more determined than ever.
“Consumers appear to be more willing to buy their next move, a preference that could be helped by the expectation of persistently low mortgage rates as well as the increased savings rate during the pandemic that may have allowed many to afford a down payment. ” he said.
The number of respondents who expect mortgage rates to fall in the next 12 months rose from 2% to 6%, while house price expectations fell from 45% to 47% in May. The net share of consumers who said it was a good time to sell a home rose 1% month-over-month to 67%.