Home buyers are feeling pretty bummed out by the housing market these days. The last Fannie mae The Home Buying Sentiment Index shows that only 35% of consumers believe this is a good time to buy a home, up from 47% in April. And those who think it’s a bad time to be a home buyer jumped from 48% to 56%.
“Consumers seem very aware of higher home prices and low supply of homes, the two most frequently cited reasons for that particular sentiment,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
“However, despite difficult purchasing conditions, consumers appear to be more intent on buying on their next move, a preference that may be supported by the expectation of continued low mortgage rates, as well as the high savings rate. During the pandemic, which may have allowed many to pay an advance, ”Duncan said.
Although low inventory, bidding wars and high prices have knocked down homebuyer confidence, other factors, such as a recovering economy and stable income levels, pushed the HSPI overall index up one point to 80 in May. .
In fact, four of the six components of the HPSI that measure market expectations increased month-over-month. The HPSI is still 12.5 points higher than in May 2020, when leniency and unemployment weighed heavily on consumer confidence.
Because the housing market looks a lot like a zero-sum game right now, sellers again felt good about their position. Just over two-thirds of those surveyed in June said it was the best time to list a home and tempt swarms of home buyers, unchanged from the previous month.
Respondents also remained largely unchanged on how much the homes will actually cost. The percentage of respondents who say home prices will go up in the next 12 months decreased from 49% to 47%, while the percentage who say home prices will go down was unchanged at 17%. The share that thinks home prices will stay the same increased from 27% to 29%.
Mortgage rate expectations changed a bit in May for prospective home buyers and sellers: The percentage who expect mortgage rates to rise decreased from 54% to 49%, while the proportion of those who think mortgage rates will stay. the same increased from 33% to 38%. The remaining 6% hope to go down again.
Since rates have fallen below 3% Once again, Fannie Mae’s Economic and Strategic Group revised its purchase and refinance volume expectations. The economic group cut $ 43 billion from its purchase volume forecast for 2021; he now estimates that purchase mortgages will reach $ 1.8 trillion by the end of the year.
As historically low mortgage rates fueled the 2020 real estate market refinance wave, Fannie Mae also revised its refinance origination volume to $ 2.2 trillion in 2021, a $ 125 billion increase from the previous month’s forecast. .
Borrowers who are not filling their pockets of savings to refinance may be bouncing back in the job market. The percentage of respondents who say their household income is significantly higher than 12 months ago increased from 21% to 29%, while the percentage who say their household income is
significantly lower decreased from 17% to 13%. To top it off, the percentage of respondents who say they are not worried about losing their job in the next 12 months increased from 80% to 87%.