Last week, we talked about the forecast for the real estate market in the coming months. This week, we’re going to discuss consumer confidence in the current housing market. We will be referencing this article from CNBC.
Confidence is Low
Consumer confidence in the housing market dropped to its lowest level in over a decade, as both potential buyers and sellers have become more pessimistic, according to a survey released earlier this week by Fannie May.
Of those surveyed in July, only 17% said now is a good time to buy a home, down from 20% in June. But what’s even more telling is that only 67% of respondents said now is a good time to list their home, a dramatic decrease from 76% just a month ago.
A significantly less number of consumers now believe home prices will rise, while the share of those who believe prices will fall increased from 27% to 30%.
Home Purchase Sentiment Index
Fannie Mae’s Home Purchase Sentiment Index consists of six components: buying conditions, selling conditions, home price outlook, mortgage rate outlook, job loss concern, and change in household income.
The index fell two points in July to 62.8 and is down 13 total points since this time last year. It had hit an all-time high of 93.7 in the summer of 2019.
The average rate on a 30-year fixed mortgage started around this year at 3% and began to steadily rise, crossing the 6% threshold for a brief moment in June, and now resides in the mid-5% range.
Only 6% of those surveyed think mortgage rates will fall, while 67% said they expect them to continue to rise.
Over the last few months, sales of new and existing homes have been falling sharply, as affordability weakened and consumers worry about inflation and the broader economy.
More supply is coming on to the market, which is helping a little bit but inventory is still well below historical norms.