The runup on home prices and mortgage rates continues to weigh on the minds of aspiring homebuyers as buyer sentiment took another dip in the last month, according to recent data from Fannie Mae.
The organization’s Home Purchase Sentiment Index (HPSI) decreased by 4.7 points to 68.5 in April, its lowest level since May 2020, as surveyed consumers expressed heightened concerns about housing affordability and rising mortgage rates.
Overall, all six of the index’s components dropped month over month as 76% of consumers signaled that they believe it’s a bad time to buy a home—a survey-high and a three-percentage point increase from March. Seventy-three percent of respondents also expect mortgage rates to continue climbing over the next 12 months. Year-over-year, the full index is down 10.5 points.
“In April, the HPSI fell to its lowest level since the first few months of the pandemic, as consumers continue to report difficult homebuying conditions amid the budget-tightening constraints of inflation, higher mortgage rates and high home price appreciation,” said Doug Duncan, Fannie Mae SVP and chief economist. “The current lack of entry-level supply and the rapid uptick in mortgage rates appear to be adversely impacting potential first-time homebuyers in particular, evidenced by the larger share of younger respondents—aged 18 to 34—reporting that it’s a ‘bad time to buy a home.’”
“Additionally, consumer perception regarding the ease of getting a mortgage also decreased across nearly all surveyed segments this month, suggesting to us that the benefit of the recent past’s historically low mortgage rate environment appears to have diminished, and affordability is poised to become an even greater constraint going forward,” Duncan continued. “This sentiment is consistent with our forecast of decelerating home sales through the rest of 2022 and into 2023.”
Home Purchase Sentiment Index—Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in April by 4.7 points to 68.5. The HPSI is down 10.5 points compared to the same time last year.
- Good/bad time to buy: The percentage of respondents who said it is a good time to buy a home decreased from 24% to 19%, while the percentage who said it is a bad time to buy increased from 73% to 76%. As a result, the net share of those who said it is a good time to buy decreased eight percentage points month over month.
- Good/bad time to sell: The percentage of respondents who said it is a good time to sell a home decreased from 74% to 72%, while the percentage who said it’s a bad time to sell remained unchanged at 21%. As a result, the net share of those who said it is a good time to sell decreased two percentage points month over month.
- Home price expectations: The percentage of respondents who said home prices will go up in the next 12 months decreased from 48% to 44%, while the percentage who said home prices will go down increased from 20% to 25%. The share who think home prices will stay the same decreased from 28% to 26%. As a result, the net share of Americans who said home prices will go up decreased nine percentage points month over month.
- Mortgage rate expectations: The percentage of respondents who said mortgage rates will go down in the next 12 months increased from 4% to 5%, while the percentage who expect mortgage rates to go up increased from 69% to 73%. The share who think mortgage rates will stay the same decreased from 23% to 18%. As a result, the net share of Americans who said mortgage rates will go down over the next 12 months decreased three percentage points month over month.
- Job loss concern: The percentage of respondents who said they are not concerned about losing their job in the next 12 months decreased from 86% to 84%, while the percentage who said they are concerned remained unchanged at 11%. As a result, the net share of Americans who said they are not concerned about losing their job decreased two percentage points month over month.
- Household income: The percentage of respondents who said their household income is significantly higher than it was 12 months ago decreased from 29% to 26%, while the percentage who said their household income is significantly lower increased from 13% to 14%. The percentage who said their household income is about the same increased from 53% to 56%. As a result, the net share of those who said their household income is significantly higher than it was 12 months ago decreased four percentage points month over month.
Read the full research report for additional information.
