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With home prices and mortgage rates showing few signs of easing, Americans were increasingly convinced in May that it’s a better time to be selling a home than buying one, according to a monthly survey by mortgage giant Fannie Mae.
Last month’s Fannie Mae’s National Housing Survey shows that the percentage of Americans who thought it was a good time to sell climbed to 65 percent, up from 51 percent in December and the highest level since July.
Only 19 percent thought May was a good time to buy, down from 23 percent in April and not far above the all-time low of 16 percent seen last October and November.
High home prices and mortgage rates “remain top of mind for consumers, most of whom continue to tell us that it’s a bad time to buy a home but a good time to sell one,” said Fannie Mae Deputy Chief Economist Mark Palim in a statement. “Consumers also indicated that they don’t expect these affordability constraints to improve in the near future, with significant majorities thinking that both home prices and mortgage rates will either increase or remain the same over the next year.”
Six questions from the National Housing Survey are used to calculate Fannie Mae’s Home Purchase Sentiment Index (HPSI): Whether it’s a good or bad time to buy or to sell a house, what direction home prices and mortgage interest rates will move in the next 12 months, fears of becoming unemployed and household income trends.
Only two of the six components of the HPSI improved from April to May — expectations that home prices will increase over the next year and whether it’s a good time to sell.
The HPSI — which was often above 90 in the months leading up to the pandemic — fell 1.2 points from April to May to 65.6. That’s well above last October’s all-time low of 56.7 in records dating to 2011. But it was a sharp reversal from the 5.5-point gain in the HPSI from March to April when mortgage rates were retreating from March highs.
The debt-ceiling crisis and fears that the Federal Reserve has not yet come to grips with inflation helped send mortgage rates soaring again in May. And while home prices have come down in some markets, inventory shortages have kept home prices stable or rising in others.
The mismatch of supply and demand for homes may help explain why 80 percent of those polled by Fannie Mae in May said it was a bad time to buy, up from 77 percent in April. With only 19 percent saying it was a good time to buy, the net share of those who said it was a good time to buy decreased 7 percentage points from April to May.
With home prices holding firm in many markets, only 34 percent of those polled by Fannie Mae in May thought it was a bad time to sell, down from 38 percent in April. With 65 percent saying it was a good time to sell, the net share of those who said it was a good time to sell increased 8 percentage points from April to May.
Only 28 percent of those surveyed in May expected prices will go down in the next month, compared to 32 percent in April. While most people don’t expect home prices to go up in the year ahead, 39 percent said they did, up from 37 percent in April. With 33 percent saying they expect home prices to remain the same, the net share of those who expect home prices will go up increased by 6 percentage points from April to May.
While some economists expect mortgage rates to come down in the months ahead as the economy cools, only 19 percent of those surveyed by Fannie Mae last month thought the same, down from 22 percent in April. The percentage of those who said they expect mortgage rates to go up in the next 12 months increased from 47 percent in April to 50 percent in May. As a result, the net share of those who said they expect mortgage rates will go down over the next 12 months decreased 5 percentage points from April to May.
Although some economists still think the nation could be headed for a recession, more than three in four Americans polled by Fannie Mae last month (77 percent) said they weren’t concerned about losing their job in the next 12 months. While the percentage who said they were concerned about losing their job increased from 21 percent in April to 22 percent in May, the net share of those who said they were not concerned about losing their job decreased 3 percentage points.
While rising wages are one aspect of inflation the Fed is keeping a close eye on, most Americans polled by Fannie Mae last month (67 percent) said their household income is about the same as it was 12 months ago. One in five of those polled (20 percent) said their income was significantly higher, down from 24 percent in April. With 12 percent saying their household income was significantly lower, the net share of those who said their income was significantly higher decreased 5 percentage points from April to May.
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