Americans are growing less confident in the housing market, reaching a low point for the year as they say now is not a good time to buy a home.
Fannie Mae’s latest Home Purchase Sentiment Index decreased in October, falling two points to 85.7 and continuing its recent downward trend. Consumer confidence in housing recently hit a survey high during the spring home buying season, however since then, it has been dropping and hit its lowest point in a year in October.
The HPSI saw a decline in five of its six components in October. Americans who said now is a good time to buy a home saw the greatest drop, falling five percentage points to reach 21%, tying the second lowest reading in the survey’s history.
“After hitting a survey high during the spring home buying season, the HPSI has trended downward, declining in October to its lowest level in a year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “While the October drop was broad-based – all but one of the six HPSI components declined – the net share of consumers who said it’s a good time to buy a home posted the largest decrease, tying its second lowest reading in the survey’s history.”
Those who said now is a good time to sell a home also fell, decreasing three percentage points to 35%.
Americans also expect affordability to continue decreasing as those who expect home prices to rise increased two percentage points to 37%. The share of those who expect mortgage rates to go down fell one percentage point to -57%.
There is also a slight increase in Americans worried about their job as those who are confident about not losing their job fell by one percentage point to 78%. Those who said their household income is significantly higher than it was 12 months ago remained unchanged at 19%.
However, these negative views of the housing market don’t seem to be dragging down Americans' views of the overall economy.
“The further erosion of buying sentiment occurred despite generally positive views of the economy,” Duncan said. “Among those who said it’s a good time to buy, 30% – a record high – cited favorable economic conditions as the reason. Meanwhile, the share of consumers who think the economy is on the right track continued to grow, reaching a new survey high.”
“The contrast between the survey’s findings of weak home buying sentiment and overall economic optimism mirrors what we’re seeing in the broader economy,” he said. “While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion.”