Consumer sentiment toward the housing market remained relatively flat in June, as supply and affordability conditions continue to weigh on the industry.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) marginally increased by 0.4 points to 66 in June. Each of the six HPSI components also remained relatively unchanged month over month. The full index is up 1.2 points on a year-over-year basis.
“Confidence in the housing market appears to have plateaued at a relatively low level, suggesting many consumers may be coming to terms with elevated mortgage rates and high home prices,” says Fannie Mae senior vice president and chief economist Doug Duncan. “Home prices continue to be supported by the tight supply of homes available for sale, and, compared to the end of last year, fewer respondents today believe home prices will decrease over the next 12 months.”
According to the HPSI, the percentage of respondents who say it is a good time to buy a home increased to 22% from 19%, while the percentage of respondents who believe it is a bad time to buy decreased to 78% from 80% in June. The net share of those who say it is a good time to sell a home decreased 3 percentage points month over month.
Expectations toward mortgage rates, though, have tempered. The share of respondents who believe mortgage rates will go up decreased to 47% from 50%, while the share who think mortgage rates will stay the same increased 5 percentage points to 36%.
“This seems to signal that consumers are adapting to the idea that higher mortgage rates will likely stick around for the foreseeable future,” Duncan says. “We continue to forecast home sales to slow in the second half of the year, compared to the first half, due to ongoing affordability constraints and the lack of housing supply.”
Compared with May, the net share of respondents who are not concerned about losing their job decreased 1 percentage point, while the net share of respondents who reported their household income is “significantly higher” than it was 12 months ago increased 1 percentage point, according to the HPSI.
The HPSI combines information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey into a single number. The HPSI reflects current and forward-looking expectations of housing market conditions and complements existing data sources.
