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Homebuyers say this is the worst time ever to buy a house

Fannie Mae's “good time to buy” metric at all-time low

U.S. homebuyers are feeling pretty pessimistic about the housing market right now. In January, Fannie Mae’s Home Purchase Sentiment Index (HPSI) hit its lowest level since May 2020, when much of the country was still in facing lockdown measures due to the Covid-19 pandemic.

The HPSI dropped 2.4 points from a month prior to 71.8 points in January, according to Fannie Mae’s National Housing Survey, published on Monday. Year over year, this marks a 5.9 point drop from January 2021.

Of the index’s six components, four decreased month over month, including the components measuring consumers’ perceptions of homebuying and home-selling conditions. A survey record low of only 25% of respondents reported that it is a good time to buy a home, compared to the 69% of respondents who reported that it is a good time to sell. In addition, younger consumers are growing increasingly pessimistic about home buying conditions with only 15% of respondents aged 18-34 reporting that they felt it was a good time to buy a home, while 83% reported that it is a bad time to buy a home.

“Younger consumers – more so than other groups – expect home prices to rise even further, and they also reported a greater sense of macroeconomic pessimism,” Fannie Mae senior vice president and chief economist Doug Duncan said in a statement. “Additionally, while the younger respondents are typically the most optimistic about their future finances, this month their sense of optimism around their personal financial situation declined. All of this points back to the current lack of affordable housing stock, as younger generations appear to be feeling it particularly acutely and, absent an uptick in supply, may have their homeownership aspirations delayed.”

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Younger consumers cited concerns about job stability and the potential for rising mortgage rates as the primary reasons for their pessimism.

Experts believe that this drop in the index is due to continued affordability constraints. S&P CoreLogic Case-Shiller National Home Price Index report for November 2021, published in late January, found that in 19 of the 20 cities analyzed home prices were still at all-time highs. Additionally, markets across the country are facing record low levels of housing inventory, making it even harder for homebuyers.

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