Homebuyer and seller attitudes towards purchasing and selling a home are diverging thanks to rising home prices according to data from the Fannie Mae Home Purchase Sentiment Index (HPSI) released on Thursday. The index rose 0.6 points in May to 92.3, reaching an all-time high for the survey for the second consecutive month.
The survey found that while the net share of respondents who reported that now was a good time to sell a home increased to 46 percent, those saying that now was a good time to buy fell to 28 percent. The number of consumers who said that home prices would rise in the next 12 months remained unchanged.
“The HPSI edged up to another survey high in May, bolstered in part by a fresh record high in the net share of consumers who say it’s a good time to sell a home. However, the perception of high home prices that underlies this optimism cuts both ways, boosting not only the good-time-to-sell sentiment but also the view that it’s a bad time to buy, and presenting a potential dilemma for repeat buyers,” said Doug Duncan, SVP and Chief Economist at Fannie Mae.
Additionally, according to Duncan, “the survey’s renter respondents, who are unable to reap benefits from selling a home, the HPSI has been essentially flat in the first quarter, during which home sales were also lackluster.”
Even though homebuyer sentiment wanes, consumer sentiment on the economy continues to remain positive. The HPSI found more Americans reported improved job confidence in May and an increase in household income over the past 12 months.
On the other hand, the National Housing Survey, which is released by Fannie Mae in tandem with the HPSI showed that the share of consumers who expected their personal financial situation to improve within the next year fell 6 percentage points to 48 percent. Consumers who expected their situation to remain the same rose to 40 percent.
Rising mortgage rates are another factor that is impacting homebuyer sentiment. Even as mortgage rates this week remained stable, the net share of consumers who said mortgage rates would go down over the next 12 months decreased 1 percentage point to -49 percent in May according to the HPSI.
And this sentiment is being felt by lenders too. “According to our latest Mortgage Lender Sentiment Survey, which we expect to release on Tuesday, lenders expect mortgage demand to soften in the near term,” Duncan said.