86% of consumers say it’s a bad time to buy a house: Fannie Mae

Consumer attitudes toward the purchase of a home fell “markedly” in May, while the percentage of consumers who said it was a “bad” time to buy a home grew month over month from 79% to 86%, according to new survey data from government-sponsored enterprise (GSE) Fannie Mae.

The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 2.5 points in May to 69.4, marking an all-time low in the measurement of consumer sentiment toward homebuying. Only 14% of consumers reported last month that it was a “good” time to buy a home, down from 20% the month prior, while the share of consumers saying it was a good time to sell a home also fell from 67% to 64%, the data showed.

“Meanwhile, consumers continue to believe affordability will remain tight for the foreseeable future, as respondents believe that, on net, home prices and mortgage rates will go up over the next year,“ an accompanying statement read. “Among the positives from the survey: A growing share of respondents, now 20%, indicated that their household income is significantly higher than it was a year ago. The full index is up 3.8 points year over year.“

“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” said Doug Duncan, Fannie Mae senior vice president and chief economist.

“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.”

The “good time to buy” component is a big indicator of this reality, Duncan added. But the perception of home-selling conditions declined only marginally, suggesting that the impacts of the mortgage rate “lock-in” effect do not extend to homeowners who may 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,” he explained.

The GSE expects there to be slight improvements in for-sale inventory that could lead to small increases in sales activity by year’s end, he said.

Other data points include an unchanged rate in consumers who expect home prices to go up in the next 12 months (42%), while the share of those who expect mortgage rates to go up declined slightly from 33% to 31%. And 42% of surveyed respondents expect rates to say the same, compared with 40% one month earlier.

Three in four respondents said they are not concerned about losing their job in the next 12 months, down slightly from the previous month. But those who are concerned about a potential job loss rose slightly to 24% of respondents.

On Friday, the U.S. Bureau of Labor Statistics announced that the economy added 272,000 jobs in May, above the market consensus estimate of 180,000, which adds to the expectation that the Federal Reserve is unlikely to cut benchmark interest rates anytime soon.