Consumer confidence in the housing market dropped to the lowest level since 2011, as both prospective buyers and sellers have become more pessimistic, according to a monthly survey released Monday by Fannie Mae.
Just 17% of those surveyed in July said now is a good time to buy a home, down from 20% in June. Even more telling, however, is that the share of sellers who think it’s a good time to list their homes dropped to 67% in July from 76% two months prior.
Far fewer consumers now think home prices will rise, while the share of those who think prices will fall jumped from 27% to 30%.
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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. Overall, the index fell two points in July to 62.8. It’s down 13 points from a year earlier. It hit an all-time high of 93.7 in summer 2019, before the pandemic.
“Unfavorable mortgage rates have been increasingly cited by consumers as a top reason behind the growing perception that it’s a bad time to buy, as well as sell, a home,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, wrote in a release.
The average rate on the 30-year fixed mortgage started this year around 3% and then began rising steadily, briefly crossing the 6% line in June, according to Mortgage News Daily. It fell back slightly since then but is still in the mid-5% range.
Just 6% of those surveyed think mortgage rates will fall, while 67% said they expect rates to rise further.
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Sales of both new and existing homes have been falling sharply over the last few months, as affordability weakens and consumers worry about inflation and the broader economy.
Big losses in the stock market have also caused demand for higher-end homes to drop. More supply is coming on the market, which is helping a little bit, but inventory is still well below historical norms, especially at the entry level.
“With home price growth slowing, and projected to slow further, we believe consumer reaction to current housing conditions is likely to be increasingly mixed: Some homeowners may opt to list their homes sooner to take advantage of perceived high prices, while some potential homebuyers may choose to postpone their purchase decision believing that home prices may drop,” added Duncan.
Source: | This article originally belongs to Nbcnews.com
