It’s difficult to get a read on a market that fluctuates so much—especially in an environment that’s anything but normal. The new Home Purchase Sentiment Index® (HPSI) from Fannie Mae, however, provides a glimpse into what today’s consumers are feeling and whether or not it’s a bad time to buy.
Overall, the index remained relatively flat in June, decreasing only by 0.3 points to 79.7. When asked whether it was a good time to buy or sell, and what their market expectations were, consumers didn’t hold back.
– 64% of respondents said it’s a bad time to buy a home (up from 56% last month)
– 77% of respondents said it’s a good time to sell (up from 67% last month)
– 48% expect home prices to go up in the next 12 months (up from 47%)
– 21% believe home prices will go down (down from 17%)
– 57% believe mortgage rates will increase in the next 12 months (up from 49%)
– Only 6% believe mortgage rates will decrease
What this means:
“The HPSI remained flat this month, although its underlying buy and sell components continued to diverge, setting record positive and negative readings, respectively,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Consumers also continued to cite high home prices as the predominant reason for their ongoing and significant divergence in sentiment toward homebuying and home-selling conditions.
“While all surveyed segments have expressed greater negativity toward home-buying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in home-buying sentiment than homeowners,” said Duncan. “It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership.”
“Despite the pessimism in home-buying conditions, we expect demand for housing to persist at an elevated level through the rest of the year. Mortgage rates remain not too far from their historical lows, and consumers are expressing even greater confidence about their household income and job situation compared to this time last year, when the pandemic had shut down wide swaths of the economy,” added Duncan.
Here in NorCal, more buyers seem to be frustrated with the multiple-offer process as opposed to being skeptical about the market. It’s crazy out there right now!