Fannie Mae sentiment survey stagnates as mortgage rates, high prices take toll

Seller-side confidence high, could bode well for short-term sales activity

Has the upturn of mortgage rates plateaued consumer confidence in the housing market again? The latest figures from Fannie Mae’s Home Purchase Sentiment Index (HPSI) appear to suggest so.

The index stayed static at a reading of 71.9 in April, still up 5.1 points year over year but showing signs of stagnation. There was marginal movement in all six of the index’s component questions; just 20% of respondents to the Fannie Mae survey from which the index is derived, for example, said it’s a good time to buy a home. That’s down from 21% month over month, while the percentage who say it’s a bad time to buy was unchanged at 79%, resulting in a net change of 1 percentage point from March.

Sellers are much more confident, though seller sentiment is on a moderate uptick. The share of respondents who believe it’s a good time to sell is up from 66% to 67%, while the percentage of those who say it’s a bad time to sell is down from 34% to 32%. That’s a net increase of 3 percentage points month over month.

Home price expectations are growing moderately as well, with the net share of those who say prices will increase in the next 12 months up by 3 percentage points.

“The HPSI, unchanged this month, may have hit another plateau as consumers maintain their ‘wait and see’ approach to the housing market,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Overall, housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would move lower. However, recent data showing stickier-than-expected inflation, rising mortgage rates, and continued home price appreciation appear to have given consumers pause regarding the market’s direction.

Duncan added that consumer confidence on the home-selling side is a good bellwether for housing activity since it may mean more listings, particularly for those who may need to move for lifestyle reasons (a new job or a change in relationship status, for example) and have already begun adjusting their financial expectations to the current mortgage rate and price environment.

“However, for potential homebuyers in less of a rush to transact, ongoing affordability challenges may continue to keep many of them on the sidelines — one reason why we expect home sales to tick up only gradually over the course of the year,” Duncan said.


More Headlines