Americans’ confidence that the economy is on the right track is at its lowest level since 2013, but increasingly negative consumer sentiment is not seen as an immediate threat to home sales as homebuyer demand continues to outpace available listings.

That’s according an analysis by economists at Fannie Mae accompanying the releasing of the mortgage giant’s latest National Housing Survey. The Home Purchase Sentiment Index (HPSI), a composite index based on six questions from the National Housing Survey, was up one point in October, to 75.5.

The monthly survey of 1,000 homeowners and renters found that a survey-high 77 percent of Americans think it’s a good time to sell a home.

With listings scarce and prices in many markets at all-time highs, only 30 percent think it’s a good time to buy. Nevertheless, 69 percent of those surveyed said they’d rather buy than rent if they were going to move.

But the share of consumers who said they think the economy is on the right track fell by 7 percentage points, to 25 percent. The share who think the economy is on the wrong track rose by the same amount, to 65 percent — a new high for the pandemic.

Doug Duncan

“We believe the uptick in negative economic sentiment is likely a function of ongoing supply chain disruptions and inflation concerns,” said Fannie Mae Chief Economist Doug Duncan, in a statement. “However, while economic uncertainty could potentially dampen mortgage demand over the longer term, we believe current market conditions remain conducive to home purchase activity, as demand for homes continues to far outstrip the supply available for sale.”

Conducted between Oct. 1 and Oct. 23, the October 2021 National Housing Survey found that a growing majority of Americans (55 percent) now expect mortgage rates will go up in the next 12 months.

The Federal Reserve didn’t officially announce its plans to start withdrawing its support for mortgage rates until Nov. 3 — more than a week after Fannie Mae’s survey of homebuyer sentiment concluded. But the Fed has been telegraphing its intentions for some time, and Americans are clearly getting the message, or are concerned about inflation in general.

The share of Americans who think mortgage rates will go down over the next 12 months fell to 5 percent in October. That brought the “net share” of those expecting rates to fall down to negative 50 percent, a new low for the pandemic.

A record 77 percent of those surveyed in October said it was a good time to sell a home, and only 17 percent thought it was a bad time. The net share of those who said it’s a good time to sell increased by 5 percentage points from September, to 60 percent.

Only 28 percent of those surveyed thought October was a good buy a home, down from 30 percent in September. But the share who thought it was a bad time to buy also decreased, from 66 percent in September to 65 percent in October. So the net share of those who said it was a good time to buy increased 3 percentage points.

If they had to move, 69 percent of those surveyed said they’d want to buy a home rather than rent. That’s up from 67 percent in September, but down from this year’s high of 72 percent in May. The share who said they’d prefer to rent fell 2 percentage points from September, to 26 percent.

One factor that could be driving the desire to own is the conviction that home prices will stay the same or keep going up over the next 12 months. Only 22 percent of those surveyed see home prices coming down in the next 12 months, down from 24 percent in September.

With 71 percent of those surveyed convinced that home prices will either go up (39 percent) or stay the same (32 percent), the net share of those who think prices will go up increased by 4 percentage points from September to October, to 17 percent.

Email Matt Carter

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