Homebuying Sentiment Hits New Survey Low

Rhea-AI Summary

The Fannie Mae Home Purchase Sentiment Index® (HPSI) dropped 2.5 points in May, reaching 69.4. This decline marks a new survey low for consumer attitudes toward homebuying conditions, with only 14% of respondents deeming it a good time to buy a home, down from 20% last month. Similarly, those believing it's a good time to sell fell from 67% to 64%. Despite this, household income perceptions improved, with 20% of respondents reporting higher incomes than a year ago. Consumer sentiment reflects frustration over unaffordability, with expectations that home prices and mortgage rates will rise in the near future. The HPSI is up 3.8 points year over year.

Positive

• Household income perception improved, with 20% of respondents reporting higher incomes than a year ago.
• The net share of those expecting home prices to rise increased 2 percentage points month over month.
• The HPSI is up 3.8 points year over year, indicating a long-term improvement.

Negative

• The HPSI dropped 2.5 points in May to 69.4, hitting a new survey low for homebuying conditions.
• Only 14% of respondents believe it's a good time to buy a home, down from 20% last month.
• The share of respondents who think it's a good time to sell a home decreased from 67% to 64%.
• The percentage of respondents not concerned about job loss decreased from 76% to 75%.

Citing Unaffordability, 86% of Consumers Say It's a Bad Time to Buy a Home

WASHINGTON, June 7, 2024 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased 2.5 points in May to 69.4 as the component measuring consumer attitudes toward homebuying conditions fell markedly, reaching an all-time survey low. This month, only 14% of consumers indicated that it's a good time to buy a home, down from 20% last month, while the share believing it's a good time to sell fell from 67% to 64%. Meanwhile, consumers continue to believe affordability will remain tight for the foreseeable future, as respondents believe that, on net, home prices and mortgage rates will go up over the next year. Among the positives from the survey: A growing share of respondents, now 20%, indicated that their household income is significantly higher than it was a year ago. The full index is up 3.8 points year over year.

"Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn't happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability. This is most clearly evidenced by our 'good time to buy' component falling to a new survey low this month. On the other hand, homeowners' perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months. This suggests to us that, despite the so-called 'lock-in effect,' some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future. As our latest forecast notes, we expect improvements to housing inventory will lead to slightly increased sales activity through the end of the year."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased 2.5 points in May to 69.4. The HPSI is up 3.8 points compared to the same time last year. Read the full research report for additional information.

• Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 20% to 14%, while the percentage who say it is a bad time to buy increased from 79% to 86%. As a result, the net share of those who say it is a good time to buy decreased 13 percentage points month over month.
• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 67% to 64%, while the percentage who say it's a bad time to sell increased from 32% to 35%. As a result, the net share of those who say it is a good time to sell decreased 6 percentage points month over month.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged at 42%, while the percentage who say home prices will go down remained unchanged at 18%. The share who think home prices will stay the same increased from 39% to 40%. As a result, the net share of those who say home prices will go up in the next 12 months increased 2 percentage points month over month.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 26% to 25%, while the percentage who expect mortgage rates to go up decreased from 33% to 31%. The share who think mortgage rates will stay the same increased from 40% to 42%. As a result, the net share of those who say mortgage rates will go down over the next 12 months remained unchanged month over month.
• Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 76% to 75%, while the percentage who say they are concerned increased from 23% to 24%. As a result, the net share of those who say they are not concerned about losing their job decreased 1 percentage point month over month.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 17% to 20%, while the percentage who say their household income is significantly lower remained unchanged at 12%. The percentage who say their household income is about the same decreased from 70% to 67%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 3 percentage points month over month.

About Fannie Mae's Home Purchase Sentiment Index
The Home Purchase Sentiment Index^® (HPSI) distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey^® (NHS) into a single number. The HPSI reflects consumers' current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers' evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

About Fannie Mae's National Housing Survey
The National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed attitudinal longitudinal surveys of its kind, to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). For more information, please see the Technical Notes.

Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to support the housing market. The May 2024 National Housing Survey was conducted between May 1, 2024 and May 17, 2024. Most of the data collection occurred during the first two weeks of this period. The latest NHS was conducted exclusively through AmeriSpeak^®, NORC at the University of Chicago's probability-based panel, on behalf of PSB Insights and in coordination with Fannie Mae. Calculations are made using unrounded and weighted respondent level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.

Detailed HPSI & NHS Findings
For detailed findings from the Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:
fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

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Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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SOURCE Fannie Mae

FAQ

What is the current value of Fannie Mae's Home Purchase Sentiment Index (HPSI) as of May?

The HPSI decreased 2.5 points in May, reaching 69.4.

How many consumers believe it is a good time to buy a home according to the latest Fannie Mae survey?

Only 14% of consumers believe it is a good time to buy a home, down from 20% last month.

What percentage of consumers think it is a good time to sell a home in the latest Fannie Mae report?

64% of respondents believe it is a good time to sell a home, down from 67% last month.

How has the perception of household income changed according to Fannie Mae's latest survey?

20% of respondents reported their household income is significantly higher than it was a year ago.

What are the consumer expectations for home prices in the next 12 months according to Fannie Mae?

42% of respondents believe home prices will go up in the next 12 months.

What does the latest Fannie Mae survey say about mortgage rate expectations?

25% of respondents expect mortgage rates to go down in the next 12 months, while 31% expect them to go up.

How has job loss concern changed according to Fannie Mae's latest HPSI?

The percentage of respondents not concerned about losing their job decreased from 76% to 75%.