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A record 82% of consumers reported that it’s a “bad time to buy” a home

Consumers are confident about their personal financial situations but are still skeptical about buying homes

Consumers’ increased confidence regarding their personal financial situations was largely offset by greater pessimism toward home-buying conditions, Fannie Mae’s home purchase sentiment index (HPSI) showed.

The HPSI — which tracks the housing market and consumer confidence to sell or buy a home — rose a mere 0.8 points to 66.8 in July. The full index is up 4 points year over year.

A total of three of HPSI’s six components increased month over month — including the components measuring job security and home price expectations.

However, 82% of consumers reported that it’s a “bad time to buy” a home, a new survey high. It’s up from 78% in June.

“While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. 

While a significant majority of consumers indicated that their jobs are stable and that their incomes are the same or better than they were 12 months ago, home buying sentiment once again matched an all-time low, with only 18% telling us that it’s a good time to buy a home, Duncan noted.

“Unsurprisingly, consumers continue to attribute the challenging conditions to high home prices and unfavorable mortgage rates. Further, the share of consumers expecting home prices to continue to rise has also been on a steady climb since March, which may only add to perceptions of unaffordability,” Duncan said.

Home prices across the country are on the rise especially in the Midwest and Northeast markets, according to Black Knight‘s monthly mortgage monitor report.

Nationally, home prices in June rose by 0.67% month-over-month on a seasonally adjusted basis. The annual home price increase was 0.8% in June, up from just 0.2% in May.

“We have not seen much movement in the ‘good time to sell’ component over the last few months, an indication that the current low levels of existing homes for sale will likely continue to persist in the near term, as also reflected in our latest forecast,” Duncan said. 

About 64% of respondents believe it’s a good time to sell while 36% said it was a bad time to do so, remaining flat from June. 

Fannie Mae’s Economic & Strategic Research (ESR) group noted that an extremely limited number of existing homes available for sale continues to define the feature of today’s housing market. 

With an ongoing tight supply of existing homes for sale on the market, the ESR group expects overall home sales in 2023 to remain near the lowest annual level since 2009. 

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