The same ongoing challenges that have hindered residential real estate for months are keeping consumers’ opinions of the housing market muted, according to the latest Home Purchase Sentiment Index (HPSI) from Fannie Mae.

The HPSI rose 0.6 points to a reading of 61.6 in January, marking the third straight month of increases for the index. However, the HPSI still remains well below its pre-pandemic highs and is down 10.2 points year over year.

Of the six component questions used to derive the overall HPSI reading, three saw an increase in positive answers, including the ones relating to home selling conditions, near-term home price outlook and household income. But the vast majority of Americans still view the homebuying environment as onerous; just 17% of Fannie survey respondents believe it’s currently a good time to buy a home, down from 21% in December. At the same time, the share of those who feel it’s a bad time to buy grew from 76% to 82%, leaving the net share of those who say it’s a good time to buy down 9 percentage points monthly.

“January’s HPSI results showed that consumer sentiment toward the housing market remains subdued by historical standards,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist. “For consumers, the same affordability issues are persisting, as they continue to indicate that high home prices and high mortgage rates make it a ‘bad time to buy’ a home.”

Duncan also pointed out that survey participants’ improving outlook on home prices may actually be a negative indicator in the near term, as some may look to hold off on buying a home until prices mitigate further.

“The latest survey data also indicated that the majority of consumers expect home prices to decrease or remain flat over the next year, which may incentivize some potential homebuyers to delay their purchase decision,” he said. “Although ‘good time to sell’ sentiment ticked upward this month, it’s still much lower than it was a year ago, as purchase affordability remains seriously constrained and mortgage demand has receded.

“Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months.”