Housing sentiment improves for first time in 3 months
Housing sentiment saw its first uptick in three months as consumers are feeling more confident about their economic situations. However, current market conditions and affordability concerns limited any optimism.
The Fannie Mae Home Purchase Sentiment Index increased by 1.5 points to 88.0 in August, marking the first improvement since May.
The small boost in positivity was generated by surges in the job and income components of the HPSI. The net number of respondents who said they were not concerned about losing their job increased by 15 percentage points to 80%, a new survey high. Meanwhile, the net share of Americans who said their household income is significantly higher than it was 12 months ago rose by 1 percentage point to 22%, which was also a new high for the survey.
Opinions on the housing market weren’t as positive. The net share of respondents who said now is a good time to buy a home fell 3 percentage points to 21%. Sentiment over selling a home also dropped. The net share of respondents who said now was a good time to sell a home fell by 3 percentage points, even though existing-home prices rose to a record high in August.
The net number of respondents who said mortgage rates will decrease over the next 12 months remained unchanged at 52%. Mortgage applications fell to its lowest level since January 2016 in August while rates continue to rise. The 30-year fixed-rate mortgage has risen from 3.78% to 4.54% year-to-date, per Freddie Mac.
“Consumers are attuned to the divergence between the slowing housing market and strong macro economy,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Consumers were less optimistic this month about both homebuying and home selling conditions, while perceptions of income growth and confidence about job security are at survey highs. After years of robust home price growth outpacing income growth, consumers face significant housing affordability challenges at the low end of the market.”
While situations seem to be improving, consumers aren’t thriving enough yet to overcome shrinking inventory, rising home prices, increased competition and climbing interest rates.