The share of consumers who think now is a good time to buy a home officially plummeted to an all-time low, according to a new housing industry report.
This is the second consecutive month it has fallen, dropping six percentage points since June to 64% and tying the all-time survey low, Fannie Mae’s August National Housing Survey results found.
“The August National Housing Survey results lend support to our forecast that 2015 will likely not be a breakout year for housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
Duncan further explains why, according to the survey, more and more Americans are losing interest in homebuying in the current economic environment.
“The deterioration in consumer attitudes about the current home buying environment reflects a shift away from record home purchase affordability without enough momentum in consumer personal financial sentiment to compensate for it,” Duncan said.
But it is not all bad news. For one, some sectors of the mortgage production universe are seeing significant growth.
Furthermore, Americans’ attitude toward the future of the housing market is getting more positive, suggesting that housing activity could resume its modest recovery in 2015 after some pullback in 2014, the Fannie Mae survey found.
As noted in HousingWire’s Monday Morning Cup of Coffee, thanks to a weak first half of 2014, Fannie Mae now thinks total home sales will actually be lower in 2014 than they were in 2013.
“While prospective buyers certainly wouldn’t mind if home prices came back down, it could be rough for the economic recovery. Because homes have regained so much of their lost value, many homebuyers once again have positive equity in their homes. And if prices were to decline, millions of U.S. homeowners could once again find themselves underwater, which would be a very bad thing,” The Motley Fool said.
In addition, the share of people who said they would buy if they were going to move fell to 64%, while the share of people who would rent increased to 32% — the narrowest gap in more than a year.
“To date, this year’s labor market strength has not translated into sufficient income gains to inspire confidence among consumers to purchase a home, even in the current favorable interest rate environment,” Fannie Mae’s Duncan said. “Our third quarter Mortgage Lender Sentiment Survey results, to be released later this month, are expected to show whether mortgage demand from the lender perspective is in line with consumer housing sentiment.”