Rising home prices contributed to homebuyer sentiment declining in December, according to the latest data from Fannie Mae’s Home Purchase Sentiment Index.
According to Fannie, the HPSI decreased by 2.7 percentage points in December to 83.5, reversing November’s increase.
The share of Americans who reported now is a good time to buy a home retreated 12 percentage points in December and the share of those who say it’s a good time to sell increased one percentage point.
“Consumer attitudes regarding whether it's a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said.
However, respondents expressed a slightly more “optimistic” outlook on job security, as the net share of those confident about retaining their job grew by 2 percentage points.
That being said, the net share of survey respondents who said their household income is significantly higher from 12 months ago declined 5 percentage points, according to Fannie Mae.
Notably, respondents who expect mortgage rates to reduce held steady, and the share of respondents who believe home prices will increase retreated 2 percentage points.
"Although home price growth slowed in 2018, the cumulative impact of sustained, robust increases in home prices outpacing income growth likely helped drive the share of consumers citing high home prices as a primary reason for a bad time to buy a home to a survey high,” Duncan continued.
“Meanwhile, consumers' views on the direction of the economy, a key support for housing market sentiment of late, has softened somewhat from its October high,” Duncan said. “Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability."