Fannie Mae homebuying sentiment crumbles to new record low

Consumers’ outlook soured amid raging inflation and higher mortgage rates

A record number of consumers believe the economy is on the “wrong track,” as getting a mortgage becomes even more difficult, according to the results of Fannie Mae’s June home purchase sentiment survey.

A survey-high of 81% of respondents reported growing more frustrated with soaring inflation and the slowing economy, said chief economist Doug Duncan. Moreover, 21% of respondents expressed job stability concerns, the highest level in 18 months.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) fell 3.4 points month over month and was down 14.9 points year over year to 64.8 – its second-lowest reading in 10 years.

“This month’s HPSI reading reflects these macroeconomic and personal financial concerns, with housing sentiment additionally diminished by the recent rapid increases in mortgage rates,” Duncan said.

“Interestingly, consumers’ perceptions of home-selling conditions declined meaningfully in June, returning to pre-pandemic levels,” he added. “This was particularly true for homeowner respondents. At the same time, consumers, especially those in prime homebuying groups, appear to be feeling the affordability pinch of higher mortgage rates: Approximately half of all respondents indicated that it would be ‘difficult’ to get a mortgage, the highest such percentage since 2014.”

Other HPSI component highlights include:

• The net share of Americans who say it is a good time to buy a home increased seven percentage points month over month to 20% in June.


• The net share of Americans who think it is a good time to sell decreased 15 percentage points to 68%.


• The net share of Americans who expect home prices to go up in the next 12 months decreased seven percentage points to 44%.


• The net share of Americans who believe mortgage rates will go down in the next 12 months increased four percentage points to 5%.


• The net share of Americans who say they are not concerned about losing their job in the next 12 months decreased eight percentage points to 78%.


• The net share of Americans who reported that their household income is significantly higher than it was 12 months ago decreased one percentage point to 25% in June.

 

“As a whole, this month’s HPSI results are consistent with our forecast of a slowing housing market through the rest of this year and next,” Duncan said.