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Surprising drop in owners optimistic about selling

 

WASHINGTON – Aug. 11, 2017 – Higher home prices are the "likely culprit" for a 1.5 percentage-point dip in Fannie Mae's July Home Purchase Sentiment Index as buyers lose confidence in their ability to purchase a home. In June, the national median home price surged to $263,800, a record high.

But wary buyers didn't cause the biggest drag on last month's index – sellers did.

The net share of 1,000 consumers who say now is a good time to sell a home dropped by 11 percentage points. Of those consumers who believed it was a bad time to sell, the share citing economic conditions as the primary reason posted a significant uptick.

However, the July dip may not be as dramatic as it seems since it follows a June reading that was a record high for the survey. Still, Fannie Mae's economists had trouble explaining the significant drop in selling sentiment.

"It's clear that high home prices are a growing challenge helping to send buying sentiment to a record low," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "However, we find the notable decline in selling sentiment surprising. If it persists, this month's decrease in optimism regarding the direction of the economy – which appears to coincide with rising uncertainty regarding the outlook for pro-growth legislation this year – could weigh on overall housing sentiment in the second half of the year."

The net share of consumers who say it's a good time to buy a home dropped 7 percentage points in July. Nearly half of these consumers cited rising prices as their primary concern, which also marks a new survey high.

Closer look at Fannie Mae's Home Purchase Sentiment Index findings

  • 23%: The net share of Americans who say it's a good time to buy a home – a 7 percentage-point drop from June and new survey low.
  • 28%: The net percentage of those who say it's a good time to sell. The share fell by 11 percentage points after reaching a survey high in June.
  • 47%: The net share of Americans who say home prices will go up. The share rose by 1 percentage point in July.
  • 75%: The net share of Americans who say they're not concerned about losing their job. This increased 9 percentage points in July and reversed a decreasing trend in June.

Source: Fannie Mae

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Related Topics: Trends