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Americans remain confident about their own finances, but more than 8 out of 10 think it’s a bad time to buy a home, according to a monthly survey of consumers by mortgage giant Fannie Mae.
Fannie Mae’s National Housing Survey is a representative telephone survey of 1,000 homeowners and renters, 82 percent of whom said July was a bad time to buy — a record in polling data going back to 2010.
A significant majority of those polled said they felt like their job situations are stable and that their incomes are the same or better than they were twelve months ago, said Fannie Mae Chief Economist Doug Duncan. But high home prices and “unfavorable” mortgage rates have soured consumers on homebuying.
Doug Duncan
“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,” Duncan said in a statement.
Only about 1 in 4 of those polled (24 percent) said they expect home prices to come down in the next 12 months, and just 16 percent believe mortgage rates will ease over the same period.
The share of consumers expecting home prices to keep climbing has grown since March, “which may only add to perceptions of unaffordability,” Duncan said.
While nearly 2 in 3 consumers polled in July (64 percent) said it was a good time to sell, there’s been little movement in that survey component in recent months, “an indication that the current low levels of existing homes for sale will likely continue to persist in the near term,” Duncan said.
Fannie Mae takes six questions from the survey and distills them into a single number, the Fannie Mae Home Purchase Sentiment Index (HPSI).
Source: Fannie Mae National Housing Survey, July 2023
With improvements in components measuring job security and home price expectations, the HPSI rose 0.8 points from June to July to 66.8, an increase of 4.0 points from a year ago.
Source: Fannie Mae National Housing Survey, July 2023
Only 18 percent surveyed in July said it was a good time to buy a home, down from 22 percent in June but up from 17 percent a year ago. With the share who said it was a bad time to buy increasing to 82 percent, the net share of those who said it was a good time to buy decreased 8 percentage points from June to -64 percent, tying an all-time survey low.
Source: Fannie Mae National Housing Survey, July 2023
With the share of survey respondents saying July was a good time to sell a home remaining unchanged at 64 percent and the percentage who said it was a bad time to sell unchanged at 36 percent, the net share of those who said it was a good time to sell remained unchanged at 28 percent. That’s down from 40 percent a year ago.
Source: Fannie Mae National Housing Survey, July 2023
With 41 percent of those surveyed in July expecting home prices to increase in the next 12 months and only 24 percent expecting them to come down, the net share of those who think home prices will go up in the next 12 months increased 6 percentage points from June to 17 percent.
Source: Fannie Mae National Housing Survey, July 2023
While less than 1 in 5 consumers expect mortgage rates to come down over the next 12 months, the share who believe rates will go up fell by 2 percentage points from June to July to 45 percent. As a result, the net share of those who predicted mortgage rates would go down over the next 12 months increased 3 percentage points from June to -29 percent — the second-best reading in the last 12 months.
Source: Fannie Mae National Housing Survey, July 2023
Eight out of 10 Americans surveyed by Fannie Mae in June (80 percent) said they were not concerned about losing their jobs, up from 77 percent in June. With the percentage who said they were concerned about losing their jobs falling 2 percentage points to 20 percent, the net share of those not concerned about losing their jobs increased 6 percentage points from June.
Source: Fannie Mae National Housing Survey, July 2023
At 9 percent, the net share of those who said their household income was significantly higher in July than it was 12 months ago remained unchanged from June and was down 2 percentage points from a year ago.
In their July forecast, Fannie Mae economists said the odds that the U.S. will manage to avoid a recession and achieve a “soft landing” as the economy decelerates are improving, but the Federal Reserve is likely to pursue a “higher-for-longer” rate strategy that will keep mortgage rates elevated and put a damper on home sales this year and next.
The rapid run-up in mortgage rates has constrained inventories of existing homes for sale, in part, because many homeowners feel “locked in” to the low rate on their current mortgages and are reluctant to sell.
Continued strength in the economy means Fannie Mae forecasters don’t see mortgage rates coming down below 6 percent until the final three months of 2024.
Editor’s note: This story has been updated to correct that 82 percent of consumers surveyed by Fannie Mae in July said it was a bad time to buy.
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