The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index (HPSI) sank to an all-time low in May with a 2.5-point drop to 69.4.
Last month, only 14% of consumers polled for the survey felt this is a good time to buy a home, down from 20% in the previous month, while the share believing it’s a good time to sell dropped from 67% to 64%.
The percentage of respondents who predicted home prices will go up in the next 12 months remained unchanged at 42%, while the percentage who say home prices will go down remained unchanged at 18%. The share who forecasted home price increases in the next 12 months increased from 39% to 40%.
The percentage of respondents who felt mortgage rates will go down in the next 12 months decreased from 26% to 25%, while the percentage who expect mortgage rates to go up decreased from 33% to 31%. The share that predicted mortgage rates will stay the same increased from 40% to 42%.
Doug Duncan, Fannie Mae senior vice president and chief economist, opined, “While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability. This is most clearly evidenced by our ‘good time to buy’ component falling to a new survey low this month.”
“On the other hand,” Duncan added, “homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months. This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future. As our latest forecast notes, we expect improvements to housing inventory will lead to slightly increased sales activity through the end of the year.”
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