Consumer Housing Market Sentiment Falters

Consumer sentiment in the U.S. housing market is declining. In February, Fannie Mae’s Home Purchase Sentiment Index dropped by 1.2 points to 71.6. This is the first year-over-year decline in homebuyer sentiment in nearly two years. Although the share of survey respondents who say it's a good time to buy a home increased in February from 22% to 24%, the share who say it's a good time to sell dropped to 62%, from 63% the month prior. According to Fannie Mae’s senior vice president and chief economist Mark Palim, high home prices are the primary cause of this decline.

"In February, the HPSI saw its first year-over-year decline in nearly two years, which was mostly due to a shrinking share of consumers expressing optimism about the direction of mortgage rates,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “This growing pessimism makes sense, as mortgage rates had remained near the 7% threshold for a few months, including when we fielded this survey. The decline in sentiment was further impacted by consumers’ growing concerns about their own personal financial situations. While some consumers may be slowly acclimating to the higher mortgage rate environment, the vast majority continue to believe it is a ‘bad time’ to buy a home – with high home prices cited as the primary sticking point. We continue to expect home sales activity to remain relatively light over our forecast horizon due to the ongoing lack of supply and overall unaffordability.” Read more