Buyers and Sellers More Cautious as COVID-19 Cases Spike
A monthly survey for Dec. found market optimism dipping. It could be pandemic fatigue, a delay based on future vaccine hopes or frustration over a lack of inventory.
NEW YORK – Americans felt more angst about selling their homes in December, according to Fannie Mae’s latest Home Purchase Sentiment Index, which is based on a poll of 1,000 consumers.
Home selling sentiment dropped last month came as consumers faced worsening COVID-19 infections across the U.S., says Doug Duncan, Fannie Mae’s senior vice president and chief economist. The index’s “good time to sell” and “good time to buy” components dropped “significantly” as respondents noted concern over economic conditions, he adds.
The seller-side component dropped for the first time since April – and by 18 points, reversing most of the increases over the previous three months.
It implies that “at least temporarily, potential home sellers might wait to list their homes,” Duncan says. “If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional – albeit lesser – home price growth, which could contribute to a further moderating of home sales.”
The index doesn’t suggest the reasons for a dip, but a number of issues could impact attitudes. A pandemic resurgence could, for example, convince more buyers and sellers to hunker down and see what happens. Or hopes for vaccine success by late spring could have convinced some buyers and sellers to wait a bit for a safer time to move. In addition, some buyers may have become discouraged by the lack of for-sale inventory.
The index is based on Americans’ perceptions of the housing market, including home buying and selling, as well as personal finances and jobs. The index’s reading in December dropped for the second consecutive month and fell to its lowest level since May 2020.
December Home Purchase Sentiment Index results
- Buying: 52% of consumers say now is a good time to buy a home, down from 57% in November.
- Selling: 50% of consumers say now is a good time to sell a home, falling from 59% the month prior. The percentage of consumers who say now is a bad time to sell rose to 42%.
- Home price expectations: 41% of consumers say they expect home prices will go up over the next 12 months; 16% expect home prices to go down.
- Mortgage rates: 43% of consumers expect mortgage rates to rise over the next 12 months; 39% believe rates will decrease; and 8% expect them to stay the same.
- Jobs: 75% of respondents say they are not concerned about losing their job over the next 12 months, down slightly from 76% the previous month. But 25% express concern about losing their job over the next year.
- Household income: 20% of consumers say their household income is significantly higher than it was 12 months ago; 18% say their income is significantly lower. The percentage who say their household income is about the same rose to 61% in December.
Source: “Home Purchase Sentiment Index,” Fannie Mae (Jan. 7, 2021)
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