Affordability constraints have consumers increasingly convinced it’s a good time to sell, bad time to buy
The Home Purchase Sentiment Index® (HPSI) is a composite index designed to track consumers’ housing-related attitudes, intentions, and perceptions, using six questions from the National Housing Survey® (NHS). To learn more about Fannie Mae’s Home Purchase Sentiment Index and National Housing Survey consumer attitude measures, please click here.
WASHINGTON, DC – June 7, 2023 – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased in May by 1.2 points to 65.6, as affordability constraints continue to color consumers’ perceptions of homebuying and home-selling conditions. Four of the HPSI’s six components decreased month over month, most notably the component polling consumers’ belief that it’s a “good time to buy,” which is once again nearing its survey low. The “good time to sell” component, however, increased in May to its highest level since last July. Additionally, for the second consecutive month, a greater share of consumers indicated that they expect home prices to increase over the next year. The full index is down 2.6 points year over year.
“As we near the end of the spring homebuying season, the latest HPSI results indicate that affordability hurdles, including high home prices and mortgage rates, remain top of mind for consumers, most of whom continue to tell us that it’s a bad time to buy a home but a good time to sell one,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist. “Consumers also indicated that they don’t expect these affordability constraints to improve in the near future, with significant majorities thinking that both home prices and mortgage rates will either increase or remain the same over the next year. Notably, the same factors impacting affordability may also be affecting the perceived ease of getting a mortgage. This was particularly true among renters: 81% believe it would be difficult to get a mortgage today, matching a survey high.”
Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in May by 1.2 points to 65.6. The HPSI is down 2.6 points compared to the same time last year. Read the full research report for additional information.
- Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 23% to 19%, while the percentage who say it is a bad time to buy increased from 77% to 80%. As a result, the net share of those who say it is a good time to buy decreased 7 percentage points month over month.
- Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 62% to 65%, while the percentage who say it’s a bad time to sell decreased from 38% to 34%. As a result, the net share of those who say it is a good time to sell increased 8 percentage points month over month.
- Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 37% to 39%, while the percentage who say home prices will go down decreased from 32% to 28%. The share who think home prices will stay the same increased from 31% to 33%. As a result, the net share of those who say home prices will go up increased 6 percentage points month over month.
- Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 22% to 19%, while the percentage who expect mortgage rates to go up increased from 47% to 50%. The share who think mortgage rates will stay the same remained unchanged at 31%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 5 percentage points month over month.
- Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 79% to 77%, while the percentage who say they are concerned increased from 21% to 22%. As a result, the net share of those who say they are not concerned about losing their job decreased 3 percentage points month over month.
- Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 24% to 20%, while the percentage who say their household income is significantly lower increased from 11% to 12%. The percentage who say their household income is about the same increased from 64% to 67%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 5 percentage points month over month.
About the ESR Group
Fannie Mae’s Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was recently awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.
