Despite Slight Improvement in Home Buyers’ Optimism, Overall Sentiment Remains That It’s a ‘Bad Time’ to Buy a Home

WASHINGTON—The Fannie Mae Home Purchase Sentiment Index (HPSI) increased 3.2 points in June to 72.6, rebounding from a dip in May and returning the index nearer the plateau it set earlier this year.

Still, the percentage of consumers who consider a good time to be home shopping remains low. During June 19% of consumers indicated that it’s a good time to buy a home, up from 14% in May, which represented a new survey low, according to Fannie Mae. The share believing it’s a good time to sell also increased, rising from 64% to 66%.

“Greater shares of consumers also indicated belief that home prices and mortgage rates would rise over the next 12 months,” Fannie Made stated.

The survey found that among the household finance components, the percentage of consumers expressing a sense of job security jumped to 79%, an increase of four percentage points compared to May. The full index is up 6.6 points year over year, Fannie Mae said.

‘Affordability Concerns’
“Affordability concerns remain the primary driver of consumer housing sentiment, even as the topline findings from our monthly survey showed a modest uptick in optimism on both homebuying and home-selling conditions,” Mark Palim, Fannie Mae vice president and deputy chief economist, said in a statement. “If mortgage rates decline through the end of the year, as we currently forecast, we do think home sales activity will pick up, but progress on that front is likely to be slow due to the ongoing imbalance between supply and demand.

‘Little Upside’

“A significant majority of consumers continue to tell us that it’s a ‘bad time’ to buy a home, and they’re also telling us that they expect both home prices and mortgage rates to move higher over the next 12 months,” continued Palim. “Taken together, in our view, this leaves little upside to overall sentiment until meaningful progress is made on affordability – most likely in the form of either lower rates or improved supply. Of course, the flip side to a difficult purchase market is an advantageous sales market, and respondents also maintained their position that it’s a generally good time to sell, pointing to high home prices as the primary reason.”