In July, Fannie Mae’s Home Purchase Sentiment Index (HPSI) edged up, with rising personal financial confidence but continued negative outlook on homebuying conditions. Three of six index components grew, including job security and home price expectations. Nonetheless, 82% felt it was an unfavorable time to buy, a survey peak, surpassing June’s 78%. The yearly index is 4.0 points higher.
Doug Duncan, Fannie Mae’s Chief Economist, noted that consumer confidence in personal finances is strong. However, housing sentiment lags behind broader economic outlook due to affordability concerns. Despite stable jobs and income, just 18% viewed it as a good time to buy, citing high prices and unfavorable mortgage rates.
Duncan also noted a rising expectation of higher home prices since March, fueling affordability concerns. The “good time to sell” indicator has remained stable, reflecting the ongoing shortage of homes for sale, in line with their forecast.
In July, the HPSI’s purchase sentiment index component rose by 0.8 points to reach 66.8. The HPSI has increased by 4 points compared to the previous year.
Data specific to the components, emphasized by Fannie Mae, comprises:
Home Buying Sentiment:
- Positive view dropped to 18%, negative rose to 82%, causing an 8-point decrease in positivity.
- Home Selling Sentiment:
- 64% saw it as a good time to sell, 36% as bad, staying unchanged.
- Price Outlook:
- Expectations of higher prices increased to 41%, lower prices dropped to 24%, steady prices to 34%, leading to a 6-point rise in positive outlook.
- Mortgage Rate Expectations:
- Anticipated lower rates held at 16%, expecting higher rates decreased to 45%, steady rates rose to 38%, resulting in a 3-point increase in positive rate outlook.
- Job Security:
- Confidence in job stability rose to 80%, concern decreased to 20%, causing a 2-point drop in worry.
- At 71%, the net share of those reporting significantly higher household income compared to a year ago remained unchanged month-to-month.