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Key Takeaways
- The Fannie Mae Home Purchase Sentiment Index dropped for May, as the number of people saying it was a bad time to buy a home reached the highest level ever.
- The Fannie Mae survey showed that consumers don’t see much relief coming from either mortgage rates or housing prices.
- Some consumers said they still believed now is a good time to sell a house, while 20% said that their income had increased significantly in the past year.
There’s never been a worse time to buy a house, according to new survey results from mortgage backer Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index dropped 2.5 points to 69.4 in May, hitting the lowest level in the survey’s history. According to the survey results released Friday, 86% of respondents said it was a bad time to buy.
“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” said Doug Duncan, Fannie Mae senior vice president and chief economist.
Worries Over Affordability Persist
The survey reflects worries over homebuying affordability, as mortgage rates hover north of 7% and low inventory levels have helped drive up home prices, as homebuyers “lock in” their existing lower mortgage interest rates.
Consumers aren’t expecting much improvement in the housing market over the next year, the survey showed, with 42% believing that home prices will go up this year. The same amount said they believed mortgage rates would stay around their current elevated levels.
“While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability,” Duncan said.
Some Optimism About Home Selling
However, there was some optimism in the report, as Duncan noted that Fannie Mae is projecting a slight increase in home sales this year. And at 20%, a growing share of respondents said that their household income is significantly higher than a year ago. Meanwhile, 64% said now was a good time to sell a home, the survey showed.
“Homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months,” Duncan said. “This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future.“