Fannie: Housing Sentiment Nears Record Low

WASHINGTON – After six uplifting weeks of positive inflation reports, the economy turned on a dime when it became clear inflation had not yet been beat – and it dragged the attitudes about the housing market down with it.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) for February decreased 3.6 points to 58.0, breaking a streak of three consecutive monthly increases and returning the index closer to its all-time survey low set in October 2022.

Overall, four of the HPSI’s six components decreased month-to-month, most notably those associated with job security and home-selling conditions. While both components remain positive on net, 44% of consumers said it’s a bad time to sell a home, up from 39% in January. A higher percentage (24%) also expressed concern about losing their job over the next 12 months, up from 18% last January.

Year over year, the full index is down 17.3 points.

“The HPSI declined and is now just slightly above the survey low set late last year,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “The decline was partly driven by a substantial decrease in consumers’ sense of home-selling conditions, with most respondents who indicated it’s a ‘bad time to sell’ citing unfavorable economic conditions and mortgage rates as the primary reasons for that belief.”

Duncan says home-selling sentiment is now lower than it was before the pandemic.

“Both sides of the transaction appear to be feeling cautious about the housing market,” he adds. “We believe these results corroborate our expectation for subdued home sales in the coming quarters, particularly now that mortgage rates have begun rising again.”

Home Purchase Sentiment Index highlights

• Good/bad time to buy: The percentage of respondents who say it’s a good time to buy a home increased from 17% to 20%; the percentage who say it’s a bad time decreased from 82% to 79%.
• Good/bad time to sell: The percentage who say it’s a good time to sell decreased from 59% to 54%,; the percentage who say it’s a bad time to sell increased from 39% to 44%.
• Home price expectations: The percentage who say home prices will go up in the next 12 months decreased from 32% to 30%;the percentage who say home prices will go down decreased from 37% to 35%. The share who think home prices will stay the same increased from 30% to 33%.
• Mortgage rates: The percentage who say mortgage rates will go down in the next 12 months increased from 13% to 15%; the percentage who expect mortgage rates to go up increased from 52% to 55%. The share who think mortgage rates will stay the same decreased from 33% to 28%.
• Job loss concern: The percentage who say they’re not concerned about losing their job in the next 12 months decreased from 82% to 73%; the percentage who say they’re concerned increased from 18% to 24%.

© 2023 Florida Realtors®