The Fannie Mae Home Purchase Sentiment Index (HPSI) fell 1.2 points in September to 60.8, its seventh consecutive monthly decline. Surveyed consumers expect mortgage rates will increase over the next 12 months and, for the first time since May 2020, more respondents than not expect home prices to decline.
In September, only 19 percent of consumers indicated it’s a good time to buy a home – down from 22 percent the August – while 59 percent indicated that it’s a good time to sell. The full index is down 13.7 points year-over-year.
“The HPSI declined this month to its lowest level since October 2011,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said in a release. “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.
“Moreover, 75 percent 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,” he added. “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.”
The percentage of respondents who say it is a good time to buy a home decreased from 22 percent to 19 percent, while the percentage who say it is a bad time to buy increased from 73 percent to 75 percent. As a result, the net share of those who say it is a good time to buy dropped 5 percentage points month-over-month.
The percentage of respondents who say it is a good time to sell a home remained unchanged at 59 percent, while the percentage who say it’s a bad time to sell decreased from 35 percent to 33 percent, meaning the net share of those who say it is a good time to sell increased 2 percentage points month-over-month.
The percentage of respondents who say home prices will go up in the next 12 months dipped from 33 percent to 32 percent, while the percentage who say home prices will go down increased from 33 percent to 35 percent. The share who think home prices will stay the same remained unchanged at 28 percent. As a result, the net share who say home prices will go up dropped 3 percentage points month-over-month.
The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 11 percent to 9 percent, while the percentage who expect mortgage rates to go up increased from 61 percent to 64 percent. The share who said mortgage rates will stay the same decreased from 25 percent to 20 percent, meaning the net share of Americans who say mortgage rates will go down over the next 12 months decreased 5 percentage points month-over-month.