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Homebuyer Confidence Continues to Dwindle

The latest iteration of Fannie Mae’s Home Purchase Sentiment Index (HPSI) for March decreased by 2.1 points to 73.2 as rising mortgage rates and the general condition of the housing market pushed consumers to be more pessimistic about the market overall. 

As a whole, four of the six major HPSI components fell month-over-month, which comes from Fannie Mae’s National Housing Survey (NHS). The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. 

The survey also found that 69% of respondents think that mortgage rates are going to continue to climb over the next year, a survey high. Conversely, 73% of buyers believe that now is a bad time to buy a home, a survey low. 

“The ‘Good Time to Buy’ component of the index reached yet another record low, with high home prices, rising mortgage rates, and macroeconomic uncertainty serving as consumers’ chief concerns,” said Mark Palim, Fannie Mae VP and Deputy Chief Economist. “Only 24% of consumers believe it’s a good time to buy a home, with similar levels of pessimism expressed by nearly all of the demographic groups surveyed,” 

“This month, we also saw a survey-high share of consumers expecting their financial situations to worsen over the next year; this was especially true among current homeowners,” Palim continued. “These concerns, together with the run-up in mortgage rates since the end of 2021, will likely diminish mortgage demand from move-up buyers—and fewer move-up buyers mean fewer available entry-level homes, adding to the rising-rate challenges for potential first-time homebuyers.” 

“If consumer pessimism toward homebuying conditions continues and the recent mortgage rate increases are sustained, then we expect to see an even greater cooling of the housing market than previously forecast.” 

As a whole, the index is now down 8.5% year-over-year. 

Other high-level takeaways from the report include: 

Good/Bad Time to Buy 

The percentage of respondents who say it is a good time to buy a home decreased from 29% to 24%, while the percentage who say it is a bad time to buy increased from 67% to 73%. As a result, the net share of those who say it is a good time to buy decreased 11 percentage points month over month. 

Good/Bad Time to Sell 

The percentage of respondents who say it is a good time to sell a home increased from 72% to 74%, while the percentage who say it’s a bad time to sell decreased from 22% to 21%. As a result, the net share of those who say it is a good time to sell increased 3 percentage points month over month. 

Home Price Expectations 

The percentage of respondents who say home prices will go up in the next 12 months increased from 46% to 48%, while the percentage who say home prices will go down increased from 16% to 20%. The share who think home prices will stay the same decreased from 32% to 28%. As a result, the net share of Americans who say home prices will go up decreased 2 percentage points month over month. 

Mortgage Rate Expectations 

The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 3% to 4%, while the percentage who expect mortgage rates to go up increased from 67% to 69%. The share who think mortgage rates will stay the same increased from 22% to 23%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 1 percentage point month over month. 

Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 87% to 86%, while the percentage who say they are concerned increased from 9% to 11%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 3 percentage points month over month. 

Household Income 

The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 27% to 29%, while the percentage who say their household income is significantly lower increased from 12% to 13%. The percentage who say their household income is about the same decreased from 56% to 53%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 1 percentage point month over month. 

Click here to view a full copy of the HPSI. 

About Author: Kyle G. Horst

Kyle Horst
Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].
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