Americans began to feel less confident in the housing economy as 2017 came to a close, reversing the increase in optimism from the previous month, according to Fannie Mae’s Home Purchase Sentiment Index.
The index decreased two points in December to 85.8, reversing the previous increase in November. This decrease is due to a drop in four of the total six HPSI components.
The share of those who said now is a good time to buy a home decreased five percentage points from November, and eight percentage points from last year to 24% in December. Conversely, those who said now is a good time to sell a home remained unchanged at 34%, however this is up 21 percentage points from last year.
The share of those who said home prices will go up over the next 12 months decreased two percentage points in December to 44%, and the share of Americans who said mortgage rates will go down over the next 12 months fell one percentage point in December to -52%.
But despite the caution with which Americans approached the housing market, they still showed an increase in pay in their current jobs, even as they grew less optimistic about the year ahead.
Those who said they are not concerned about losing their job decreased six percentage points to 68%, but the share reporting their income is significantly higher than it was 12 months ago increased two percentage points to 16%.
“Consumers remained cautious in their housing outlook at the end of 2017, as tax reform discussions continued,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “In December, mirroring the other major consumer sentiment benchmarks, the HPSI reflected this caution and declined slightly.”
“Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets, where consumer expectations for price increases over the next 12 months reached a new survey high,” Duncan said.