WASHINGTON—The Fannie Mae Home Purchase Sentiment Index (HPSI) remained largely flat in October, as consumer frustration toward housing unaffordability and an economy battling inflation continues to depress overall sentiment, Fannie Mae reported.
According to Fannie Mae, despite improvement in the share of consumers expressing greater job security and improved household income, 78% of respondents believe the economy is on the “wrong track,” up seven percentage points from last month, with the vast majority once again pointing to inflation as the top reason for that belief.
“This month, a survey-record 85% of consumers indicated that it’s a ‘bad time’ to buy a home, with most respondents citing high home prices and high mortgage rates as the primary reasons,” Fannie Mae said.
By comparison, only 37% believe it’s a “bad time” to sell a home. Overall, the full index is up 8.2 points from its all-time low last year, Fannie Mae added.
‘Greater Pessimism’
“Consumers expressed even greater pessimism toward the larger economy this month, in addition to their ongoing frustration with the housing market,” said Doug Duncan, Fannie Mae SVP and chief economist. “Via our October National Housing Survey, 78% of respondents told us the economy is on the ‘wrong track’ – up from 71% last month – and they overwhelmingly cited inflation as the primary reason why. Across all income groups, inflation has consistently driven the ‘wrong track’ belief since the end of last year, suggesting consumers are fed up with the high prices of many goods and services.
“Although the labor market is strong and wages have risen in the past year, consumers may believe that their purchasing power has not kept up with prices, as 69% of consumers say their incomes are ‘about the same’ compared to the previous year,” Duncan continued. “We expect this tightness in household finances, along with high home prices and elevated mortgage rates, to prolong the affordability challenges facing many would-be homebuyers.”
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