Consumer confidence in this housing market has dropped to a new low since 2011. Prospective buyers and sellers are becoming pessimistic about the market. Fannies Mae conducts a monthly survey and the numbers are on a downward trend. Just 17% of those surveyed in July said now is a good time to buy a home, down from 20% in June. Even more telling, however, is that the share of sellers who think it’s a good time to list their homes dropped to 67% in July from 76% two months prior.
Fannie Mae’s Home Purchase Sentiment Index consists of six components: buying conditions, selling conditions, home price outlook, mortgage rate outlook, job loss concern and change in household income. Overall, the index fell two points in July to 62.8. It’s down 13 points from a year earlier. It hit an all-time high of 93.7 in summer 2019, before the pandemic. “Unfavorable mortgage rates have been increasingly cited by consumers as a top reason behind the growing perception that it’s a bad time to buy, as well as sell, a home,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, wrote in a release. Just 6% of those surveyed think mortgage rates will fall, while 67% said they expect rates to rise further. Sales of both new and existing homes have been falling sharply over the last few months, as affordability weakens and consumers worry about inflation and the broader economy.
Stock market conditions have also been affecting consumer sentiment. Big losses in the market have caused the demand for homes to drop, as consumers worry about the broader economy and inflation. Big losses in the stock market have also caused demand for higher-end homes to drop. More supply is coming on the market, which is helping a little bit, but inventory is still well below historical norms, especially at the entry level. “With home price growth slowing, and projected to slow further, we believe consumer reaction to current housing conditions is likely to be increasingly mixed: Some homeowners may opt to list their homes sooner to take advantage of perceived high prices, while some potential homebuyers may choose to postpone their purchase decision believing that home prices may drop,” added Duncan.