Fannie Mae’s Home Purchase Sentiment Index fell once again in September—and with it, consumer confidence hit a new low. According to the latest data, just 16 percent of consumers reported that it’s a good time to buy a home. On the flip side, 63 percent said it was a good time to sell a home, down 3 percentage points compared to the prior month.
“Mortgage rates persistently over 7 percent appear to be deepening the malaise consumers feel about the home purchase market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first. Notably, the share of consumers expressing pessimism about homebuying conditions hit a new survey high in September, with 84 percent now indicating that it’s a bad time to buy a home. On the sell side, respondents also listed unfavorable mortgage rates as the top reason why they believe it’s a bad time to sell a home. This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon, but it also may reflect the worry of some homeowners that sale values might be suppressed slightly if the pool of qualified homebuyers is constrained by elevated mortgage rates.”
The survey also found that only 17 percent of households thought mortgage rates would come down in the next 12 months.
“In our view,” Duncan added, “all of this points to home purchase affordability remaining a problem for the foreseeable future, which we forecast will keep home sales sluggish into next year.”