WASHINGTON – The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased by 2.4 points in September to 64.5, as elevated mortgage rates further dampened already-pessimistic consumer housing sentiment, Fannie Mae reported.
Five of the HPSI’s six components decreased month over month, including the components measuring perceived homebuying and home-selling conditions, Fannie Mae reported
In September, 16% of consumers reported that it’s a good time to buy a home, matching the all-time survey low set last year. Additionally, 63% said it was a good time to sell a home, down 3 percentage points compared to the prior month. Only 17% of consumers indicated that they expect mortgage rates to go down over the next 12 months. Overall, the full index is up 3.7 points year over year.
‘Deepening Malaise’
“Mortgage rates persistently over 7% appear to be deepening the malaise consumers feel about the home purchase market,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first. Notably, the share of consumers expressing pessimism about homebuying conditions hit a new survey high in September, with 84% now indicating that it’s a bad time to buy a home.
“On the sell side, respondents also listed unfavorable mortgage rates as the top reason why they believe it’s a bad time to sell a home,” Duncan continued. “This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon, but it also may reflect the worry of some homeowners that sale values might be suppressed slightly if the pool of qualified homebuyers is constrained by elevated mortgage rates.
‘Little Relief in Sight’
“Consumers are also not seeing much affordability relief in sight, as they continue to expect home prices to increase in the next 12 months,´ Duncan went on to say. “They also indicated that their personal economic situations are showing signs of strain, including lower year-over-year household incomes and a reduced sense of job security. In our view, all of this points to home purchase affordability remaining a problem for the foreseeable future, which we forecast will keep home sales sluggish into next year.”
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