Homebuyer sentiment hits new low in Fannie Mae’s National Housing Survey

The percentage of Americans who think it’s a good time to buy a home fell to an all-time low in January, with rising home prices and interest rates exacerbating affordability issues, according to a survey released Monday by mortgage giant Fannie Mae.

Only 1 in 4 consumers responding to Fannie Mae’s latest monthly National Housing Survey thought it was a good time to buy — a new low in survey records dating to 2010.

Affordability and supply constraints continue to limit opportunities, particularly for younger buyers, said Fannie Mae Chief Economist Doug Duncan, in a statement.

Doug Duncan

“Younger consumers — more so than other groups — expect home prices to rise even further, and they also reported a greater sense of macroeconomic pessimism,” Duncan said. “Additionally, while the younger respondents are typically the most optimistic about their future finances, this month their sense of optimism around their personal financial situation declined. All of this points back to the current lack of affordable housing stock, as younger generations appear to be feeling it particularly acutely and, absent an uptick in supply, may have their homeownership aspirations delayed.”

Four of the six survey-based components used by Fannie Mae to gauge consumer sentiment toward housing declined from December to January. Fannie Mae’s Home Purchase Sentiment Index (HPSI), which distills information from the National Housing Survey into a single number, dropped 2.4 points to 71.8 in January, its lowest level since May 2020.

On the whole, the drop in the HPSI is consistent with Fannie Mae’s latest housing and economic forecast, which projects that rising mortgage rates and record home price appreciation will price many would-be homebuyers out of the market in 2022. Fannie Mae economists expect sales of existing homes will fall by 3.2 percent this year, which should help cool home price appreciation to more sustainable levels.

Source: Fannie Mae National Housing Survey, January 2022.

The last time most people surveyed by Fannie Mae thought it was a good time to buy was in March 2021, when the spring homebuying season was kicking off. At that time, 53 percent of Americans thought it was a good time to buy, and only 40 percent thought it was a bad time. In January, 70 percent said it was a bad time to buy.

Source: Fannie Mae National Housing Survey, January 2022.

While most consumers surveyed in January said it’s a good time to sell a home, the percentage who thought so dropped from 76 percent in December to 69 percent in January. With the percentage saying it’s a bad time to sell increasing to 22 percent, the net share of those who say it’s a good time to sell fell 12 percentage points from December to January.

Source: Fannie Mae National Housing Survey, January 2022.

Most consumers aren’t convinced that home prices will keep going up, with 43 percent of those surveyed in January saying they expect home prices to go up in the next 12 months, down from 44 percent in December. The percentage who said they expect home prices to go down decreased from 19 percent to 14 percent, while 35 percent said they expect prices to stay the same, up from 30 percent in December. The net share who said home prices will go up increased 4 percentage points.

Source: Fannie Mae National Housing Survey, January 2022.

With mortgage rates climbing in recent months as the Federal Reserve moves to taper the support it provided to mortgage markets during the pandemic, a growing number of consumers think rates will keep heading up. Nearly 6 in 10 (58 percent) of consumers surveyed by Fannie Mae in January said they expect mortgage rates to go up in the next 12 months, up from 56 percent in December. Only 4 percent think rates will go down, and 28 percent expect rates to stay the same. The net share of Americans who see rates going down over the next 12 months fell 2 percentage points from December to January.

Source: Fannie Mae National Housing Survey, January 2022.

Although it’s hardly a buyer’s market, 66 percent of those surveyed said that if they had to move, they’d buy a home rather than rent, which was unchanged from December. The percentage who said they’d prefer to rent fell 1 percentage point, to 28 percent.

Source: Fannie Mae National Housing Survey, January 2022.

Two-thirds of Americans (66 percent) said they think the economy is on the wrong track, up from 65 percent in December, and the percentage who said it’s on the right track dropped 2 percentage points, to 24 percent.

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