WASHINGTON—For the first time in two years, more Americans expect home prices to decline rather than rise, according to the Fannie Mae Home Purchase Sentiment Index (HPSI), which decreased 1.2 points in September to 60.8. That marks the seventh consecutive monthly decline amid growing affordability constraints.
According to Fannie Mae, 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 13.7 points.
“The HPSI declined this month to its lowest level since October 2011,” said Doug Duncan, Fannie Mae senior vice president 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.”
The Highlights
According to Fannie Mae, highlights from the most recent index include:
- 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 two 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 three 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 to 9% from 11%, while the percentage who expect mortgage rates to go up increased to 64% from 61%. The share who think mortgage rates will stay the same decreased to 20% from 25%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased five 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 one 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 five percentage points month over month, Fannie Mae said.
The Very Best in CU Reporting. Every Morning. To Your Inbox. At a Total Cost of ‘Free!’
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.