Home >> Daily Dose >> Fannie Mae: Examining “a Divergence in Housing Affordability”
Print This Post Print This Post

Fannie Mae: Examining “a Divergence in Housing Affordability”

HousingMounting concerns over supply and affordability are driving down consumers' home purchase decisions, according to the latest Fannie Mae Home Purchase Sentiment Index (HPSI).

The index dropped 0.5 points in June after reaching its survey high of 91.5 in May, the data indicated. This, despite an eight-percentage-point spike in consumer expectation of lower mortgage rates.

“Growing expectations that mortgage rates will remain steady suggest improved stability for housing affordability and helped keep the HPSI relatively flat this month, despite modest declines in other components,” said Doug Duncan, SVP and Chief Economist at Fannie Mae.

The HPSI for June indicated a four-percentage-point drop to 23% in consumer sentiment on "Good Time to Buy." Despite these dips, the overall HPSI remained slightly above (0.8 points) last year's June data.

The net share of those who said that now was a good time to sell remained unchanged at 43%, though this was four-percentage-points down compared to last year.

Consumer sentiment relating to home prices was also down eight-percentage-points compared to last year and decreased three-percentage-points month-over-month to 38%.

According to Duncan, the June home purchase sentiment was also driven by regional housing trends. “Regional variations in housing optimism appear to be tied to a divergence in housing affordability; for example, home purchase sentiment is higher in the Midwest and South than in the West and, to a lesser extent, the Northeast, where the lack of entry-level inventory and the resultant strong price appreciation has had a more profound impact on affordability,” he noted. “With fewer consumers expecting rates to jump back up–thereby creating less urgency to buy now–we expect housing market activity to remain stable.”

Looking at wider economic indicators that typically impact housing, the HPSI data indicated that the share of Americans who said they were not concerned about losing their job decreased three-percentage-points to 73%. This component is down three-percentage-points from last year. Similarly, the share of those who said that their household income was significantly higher compared to last year dipped a percentage point to 20%, month-over-month.

About Author: Radhika Ojha

Radhika Ojha is an independent writer and editor. A former Online Editor and currently a reporter for MReport, she is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Houston, Texas.
x

Check Also

First-Time Buyers See Affordable Options in Manufactured Homes

A new report finds that an increasing number of down payment assistance programs are allowing for assistance in the purchase of manufactured homes.

Subscribe to MDaily

MReport is here for you to stay on top of important developments in the mortgage marketplace. To begin receiving each day’s top news, market information, and breaking news updates, absolutely free of cost, simply enter your email address below.