The net share of consumers who think that now is the right time to buy a home declined 7 percentage points in February compared to the same time last year, according to Fannie Mae's latest Home Purchase Sentiment Index (HPSI).
The report indicated that home seller sentiment had also declined compared to last year, with the number of consumers saying that now was a good time to sell a home dropping 6 percentage points compared to last year, and 5 percentage points to 30 percent compared to January 2018.
On a month-over-month basis, Fannie Mae noted that the HPSI remained virtually unchanged, decreasing by 0.4 points to 84.3 in February. The largest change among the HPSI components, the report noted, was a 9 percentage points drop in the net share of consumers who reported a substantially higher household income compared to the same period last year. However, this drop was offset by an 8 percentage points jump in job confidence.
“The HPSI held steady in February, as consumers’ continuing optimism about economic conditions seems to be balanced with softening attitudes toward the housing market,” said Doug Duncan, SVP and Chief Economist at Fannie Mae.
Duncan noted that home price growth expectations had trended significantly downward with the net share of consumers expecting home prices to rise, falling 19 percentage points "from its survey high established at the start of 2018."
“Job confidence reached a new survey high, but consumers were less optimistic about home buying and selling conditions than they were a year ago,” Duncan said. “While declining home price expectations may point to improving affordability, the share of consumers who think it’s a bad time to buy has grown over the last year, and high home prices remain the most frequently cited concern. It is plausible that consumers believe that price gains could decelerate further, making it worthwhile to wait rather than act now.”
The report indicated that the net share of consumers who said that mortgage rates would go down over the next 12 months also rose slightly, increasing 1 percentage point to -52 percent. This component is up 5 percentage points from the same period last year, the report said.