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Housing Sentiment Slips Again, Nears Record Low

The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 1.2 points in September to 60.8, its seventh consecutive monthly decline, amid growing affordability constraints. Surveyed consumers reported expectations that mortgage rates will move higher over the next 12 months, and, for the first time since May 2020, more respondents than not expect home prices to decline. In September, only 19% of consumers indicated that it’s a good time to buy a home –down from 22% the prior month– while 59% indicated that it’s a good time to sell. Year over year, the full index is down nearly 14%.

“The HPSI declined this month to its lowest level since October 2011,” said Doug Duncan, Fannie Mae Senior VP and Chief Economist. “Consumers’ expectation that home prices will decrease matched a survey high, with a higher percentage of consumers believing home prices will decrease rather than increase over the next year – a shift in survey sentiment that had previously only happened in 2011 and at the start of the pandemic in 2020. Moreover, 75% of consumers still think it’s a bad time to buy a home, with most citing high home prices and unfavorable economic and mortgage rate conditions as primary reasons. As long as supply is limited and affordability pressures continue to constrain potential homebuyers via elevated home prices and mortgage rates, we expect home sales will remain sluggish.”

Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in September by 1.2 points to 60.8. The HPSI is down 13.7 points compared to the same time last year.

  • Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 22% to 19%, while the percentage who say it is a bad time to buy increased from 73% to 75%. As a result, the net share of those who say it is a good time to buy decreased 5 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 remained unchanged at 59%, while the percentage who say it’s a bad time to sell decreased from 35% to 33%. As a result, the net share of those who say it is a good time to sell increased 2 percentage points month over month.
  • Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 33% to 32%, while the percentage who say home prices will go down increased from 33% to 35%. The share who think home prices will stay the same remained unchanged at 28%. As a result, the net share of Americans who say home prices will go up decreased 3 percentage points month over month.
  • Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 11% to 9%, while the percentage who expect mortgage rates to go up increased from 61% to 64%. The share who think mortgage rates will stay the same decreased from 25% to 20%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 5 percentage points month over month.
  • Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 79% to 78%, while the percentage who say they are concerned remained unchanged at 21%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 1 percentage point 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 25% to 26%, while the percentage who say their household income is significantly lower decreased from 15% to 11%. The percentage who say their household income is about the same increased from 59% to 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 5 percentage points month over month.

To read the full report, including more data and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years' writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News, the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is a jazz aesthete and loves to read. She can be reached at [email protected]
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