Consumer confidence in the housing market dropped to its lowest level in a decade, with Americans feeling pessimistic about homebuying conditions in July — a sentiment largely driven by higher mortgage rates.
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The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 2 points in July to 62.8, its lowest level since 2011, according to a press release.
A meager 17% of Americans say it’s a good time to buy a home. In addition, the percentage of consumers believing it’s a good time to sell has also trended downward in recent months, falling to 67% in July from 76% in May, according to Fannie Mae.
“The HPSI has declined steadily for much of the year, as higher mortgage rates continue to take a toll on housing affordability,” Doug Duncan, Fannie Mae Senior Vice President and Chief Economist, said in the release. “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.”
In terms of mortgage rate expectations, only 6% say rates will go down in the next 12 months, while 67% expect them to go up.
As for home price expectations, 39% believe prices will go up in the next 12 months — a decrease from 44% — while 30% say they will go down, according to Fannie Mae.
“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,” Duncan said.
“Overall, this month’s HPSI results appear to confirm our forecast for moderating home sales over the coming year.”
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