Consumer confidence in housing has suffered a marked decline during this past July. Conditions are related to the pandemic, economists believe.
That is according to Fannie Mae's Home Purchase Sentiment Index (HPSI). Fannie Mae reported that the HPSI dipped 2.3 points last month, falling to 74.2. This decline follows a slight increase during the two previous months.
Survey responders reported a strong bend toward pessimism regarding their overall outlook for home buying conditions present in the market today. However, in regard to home selling, it received a bit more optimism from respondents. Specifically, half of the HPSI factors (3 out of 6) decreased month over month.
Doug Duncan, Senior Vice President and Chief Economist, commented on these findings, directly relating them to the current pandemic: "Following a partial recovery of the HPSI in the previous two months, consumer sentiment toward housing took a slight step back in July amid a rise in coronavirus infections across many parts of the country, including the south and southwest. Supply constraints appear to be applying upward pressure to consumers’ home price expectations, which in turn has contributed to both a sharp reversal in optimism about whether it is a good time to buy a home and further improvement in home-selling sentiment."
Duncan added: "The July survey was conducted as legislators considered the extension of several provisions in the CARES Act to support household incomes during the pandemic. Not surprisingly, more than any other respondent groups, renters, 18-to-34-year olds, and households earning less than $100,000 think it’s a bad time to buy a home, which we believe suggests a less favorable outlook for first-time homebuying activity."
Duncan then offered insight into what to expect in the future.
He predicted: "In the months ahead, we continue to expect consumer sentiment to be closely linked to the country’s progress in containing the spread of the virus."