A measure of consumer expectations on the housing market dipped in February, the first year-over-year decline in nearly two years, according to Fannie Mae. The overall Home Purchase Sentiment Index fell 1.8 points to 71.6 points.

“This growing pessimism makes sense, as mortgage rates had remained near the 7% threshold for a few months, including when we fielded this survey,” said Mark Palim, Fannie Mae’s chief economist, in a statement.

The index distills several data points from Fannie Mae’s National Housing Survey into a single number to reflect consumers expectations on the housing market. The index sentiment was at 72.8 in February 2024.

The share of consumers who felt it’s a good time to purchase a home inched up 2% month over month to 24%. Still, 53% of consumers still felt it was a bad time to buy.

“While some consumers may be slowly acclimating to the higher mortgage rate environment, the vast majority continue to believe it is a ‘bad time’ to buy a home — with high home prices cited as the primary sticking point,” Palim said.

Other indicators all fell. Selling conditions, home price outlook, job loss concerns and change in household income all saw a net decline in responses. The net outlook on mortgage rates decreased the most — falling by 6 points.

Although rates have been dropping for seven weeks in a row, Palim pointed to other issues in the housing market that could lead to tepid growth.

“We continue to expect home sales activity to remain relatively light over our forecast horizon due to the ongoing lack of supply and overall unaffordability,” Palim said.