The Fannie Mae Home Purchase Sentiment Index fell 2 points in July to 62.8%, its lowest level since 2011 and a sharp decline from the all-time high reached in 2019, Insider reports. The recent drop in buyer sentiment is driven by higher borrowing costs as the Federal Reserve continues to target the housing market in its efforts to cool inflation.
Of all consumers surveyed, just 17% said that now is a good time to buy a home, while the majority argued that a lack of affordability is making homeownership increasingly unattainable. Americans are also concerned about home price growth, which rose at a steady pace throughout the COVID-19 pandemic but has recently slowed in response to softening buyer demand.
"The HPSI has declined steadily for much of the year, as higher mortgage rates continue to take a toll on housing affordability," said Doug Duncan, Fannie Mae senior vice president and chief economist in the report.
He added: "Unfavorable mortgage rates have been increasingly cited by consumers as a top reason behind the growing perception that it's a bad time to buy, as well as sell, a home."
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