Mortgage rates and household income contributed to a slight decrease in homebuyer sentiment, according to the latest data from by Fannie Mae’s Home Purchase Sentiment Index. The HPSI decreased by 0.3 percentage points in September to 87.7, reversing August’s increase. This drop was due to decreases in three of the six HPSI components.
The share of Americans who reported now is a good time to buy a home climbed 5 percentage points in September and the share of those who say it’s a bad time to buy remained unchanged.
“HPSI remains flat this month as perceptions of high home prices and expectations for rising mortgage rates continue to weigh on potential homebuyers,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said.
Notably, respondents also expressed a slightly more “pessimistic” outlook on job security, as the net share of those confident about retaining their job fell by 1 percentage point.
In September, the latest Employment Situation Summary report from the U.S. Bureau of Labor Statistics revealed the unemployment rate moderately fell to 3.7%. However, wage growth paled in comparison.
According to Fannie Mae, the net share of survey respondents who said their household income is significantly higher from 12 months ago declined 3 percentage points.
“Although September’s wage increase pales in comparison to growing home prices – which rose another 7% last month – any increase is helpful for buyers trying to get in the market,” Realtor.com Chief Economist Danielle Hale told HousingWire.
The net share who expect mortgage rates to reduce in price over the next 12 months fell 4 percentage points, and the share of respondents who believe home prices will increase in the next 12 months grew 1 percentage point.
“In September, the average 30-year fixed mortgage rate increased for the second consecutive month to 4.63%, to its highest level since May 2011,” Duncan said. “In addition, the Federal Open Market Committee members’ interest rate projections at the September meeting continued to point to four additional rate increases between now and the end of 2019.”
“Still, downside risk to housing is limited by broader economic strength, which helped boost perceptions of current home buying conditions,” Duncan concluded. “For consumers who say now is a good time to buy, the share citing overall economic conditions as a reason rose to a survey high.”