Consumer housing sentiment has dipped again, according to the most recent iteration of Fannie Mae’s Home Purchase Sentiment Index (HPSI).
The index slid back 1.2 points in September, a seventh straight monthly decrease that brought the HPSI reading to 60.8. That’s the lowest level for the index since October 2011, with still-growing affordability constraints and rampant inflation heavy on the minds of survey respondents. Year over year, the overall index is down 13.7 points.
The HPSI is calculated via responses to six questions that gauge consumers’ evaluations of housing market conditions. Each of these questions is tracked through a separate subindex, with the results of these indices distilled into the overall HPSI.
Notably, for the first time since May 2020, more respondents than not indicated that they expect home prices to fall. The percentage of respondents who believe prices will rise in the next 12 months decreased from 33% to 32%. Conversely, the share of those who think prices will go down increased from 33% to 35%.
As a result, the net share of those who believe home prices will go up decreased by 3 percentage points month over month.
“Consumers’ expectation that home prices will decrease matched a survey high, with a higher percentage of consumers believing home prices will decrease rather than increase over the next year – a shift in survey sentiment that had previously only happened in 2011 and at the start of the pandemic in 2020,” said Doug Duncan, chief economist and senior vice president at Fannie Mae.
“Moreover, 75% of consumers still think it’s a bad time to buy a home, with most citing high home prices and unfavorable economic and mortgage rate conditions as primary reasons. As long as supply is limited and affordability pressures continue to constrain potential homebuyers via elevated home prices and mortgage rates, we expect home sales will remain sluggish.”
Only 19% of consumers in September believed that it’s a good time to buy a home, down from 22% the previous month. Meanwhile, as Duncan noted, 75% said it’s a bad time to buy, up from 73% in August, resulting in the net share of those who say it’s a good time to buy declining by 5 percentage points.
Fifty-nine percent, meanwhile, indicated that it’s a good time to sell — unchanged from the month prior. The share of respondents who believe it’s a bad time to sell fell from 35% to 33%, resulting in the net share of those who say it’s a good time to sell rising by 2 percentage points month over month.