Rising Costs and Lagging Supply Have Homebuying and Selling Sentiment in Decline
Rising home prices and a lack of homes for sale are still top concerns among consumers. While all six components of the Fannie Mae Home Purchase Sentiment Index declined month-over-month and the index dropped 3.9 points to 75.8 in July, the “Good Time to Buy” and “Good Time to Sell” components generated noteworthy results.
On one side, 66% of respondents said it’s a bad time to buy a house, up from 64% the previous month. On the other side, 75% said it’s a good time to sell, down from 77%. According to Fannie Mae, the HPSI is up 1.6 points year-over-year.
“Historically prime homebuying groups appear to be increasingly sensitive to the lack of affordability, as home prices continue to increase and homes for sale remain in short supply,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. He also explained that while all consumer segments expressed increased pessimism towards homebuying over the past several months, consumers aged 35-44 and those with middle-to-higher income levels reported more pessimism than other groups.
Additionally, consumer sentiment toward homebuying hit another survey low in July, as the percentage of respondents citing high home prices as the main reason for it being a “bad time to buy” also reached an all-time high, Duncan said.
“On the flip side, selling sentiment remains extremely high, and well above pre-pandemic levels, for the same commonly cited reason: high home prices,” he added.
Low mortgage rates and high demand for housing have fueled the U.S. housing market for over a year. This demand with a shortage of homes on the market has helped push prices higher. According to Zillow, the typical home price has gone up 16.7% over the past year.
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Last updated: August 11, 2021