In June, housing confidence fell slightly as more Americans reported now is not a good time to buy, according to Fannie Mae’s latest Home Purchase Sentiment Index.
According to the GSE’s report, sentiment fell by 0.5 points in June to 91.5. Although this rate is a decline from last month’s near survey high of 92, it still remains 0.8 points higher than the same time period in 2018.
Despite this annual increase, the report indicates that a majority of its components either declined or remained relatively flat in June.
Notably, the only component to increase this month, which was the index that measures whether or not mortgage rates will go down, edged up 8 percentage points to -29%.
Fannie Mae Senior Vice President and Chief Economist Doug Duncan said growing expectations that mortgage rates will remain steady suggest improved stability for housing affordability.
“Regional variations in housing optimism appear to be tied to a divergence in housing affordability; for example, home purchase sentiment is higher in the Midwest and South than in the West and, to a lesser extent, the Northeast, where the lack of entry-level inventory and the resultant strong price appreciation has had a more profound impact on affordability,” Duncan said. “With fewer consumers expecting rates to jump back up – thereby creating less urgency to buy now – we expect housing market activity to remain stable.”
Duncan may be right, as Fannie’s index reveals the component measuring if it’s a “Good time to Sell” remained unchanged at 43%. However, the component measuring if it’s a “Good time to Buy” decreased 4 percentage points to 23% in June.
This lack luster growth can possibly be attributed to a mismatch in inventory and buyer demand.
Realtor.com’s latest Housing Trend Report indicated that although buyer demand has heightened, there just isn’t enough inventory to support sales growth.
“It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history and sparked the fiercest competition among buyers we’ve ever seen. If the trend we’re seeing continues, overall inventory could near record lows by early next year,” Realtor.com Chief Economist Danielle Hale said. “So far there’s been a lackluster response to low mortgage rates, but if they do spark fresh buyer interest later in the year, U.S. inventory could set new record lows this winter.”
NOTE: Fannie Mae’s Home Purchase Sentiment Index is constructed from six questions, gauging the current views and forward-looking expectations of consumers navigating the housing market.
Published at Tue, 09 Jul 2019 19:17:00 +0000