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It’s a seller’s market, Fannie Mae survey shows

by Alsha Khan

Americans believe it’s a much better time to sell a home than to buy one, according to Fannie Mae’s latest survey of home purchase sentiment. This marks the first time in the survey’s 10-year history that has happened.

The monthly survey of about 1,000 homeowners and renters showed that more people thought April was a bad time to buy a home than a good time, the first time that’s happened in the survey’s 10-year history.

The survey uses the Home Purchase Sentiment Index (HPSI) to track consumers’ housing-related attitudes, intentions and perceptions using six questions from the National Housing Survey (NHS) regarding homebuying sentiment, selling sentiment, home price expectations, mortgage rate expectations, job concerns and household income.

In April, the net share of homebuyers and renters who said it’s a good time to buy fell 14% month over month, becoming negative for the first time in the survey’s history. Last month, 47% of respondents thought it was a good time to buy, down from 53% in March. Those who said it was a bad time to buy jumped from 40% in March to 48% in April.

This can largely be attributed to market competition from diminishing inventory and soaring home prices, despite improving economic conditions, especially for less-affluent buyers.

“Consumers in the household income range of $50,000 to $100,000, a range inclusive of the Census Bureau’s reported median household income level, showed a particularly large decrease in overall housing sentiment,” said Doug Duncan, Fannie Mae senior vice president and chief economist, in a press release. “We know that the housing market serving the affordable segment has been particularly competitive.”

He added that recent data does not indicate that inventory is likely to improve any time soon and these sentiments are likely to stick around for quite some time.

On the other hand, the net percentage of consumers who say it’s a good time to sell increased 8%, consistent with recent upward trends and is back to its pre-pandemic peak. More than two-thirds (67%) of survey respondents agreed it’s a good time to sell right now, up from March (61%).

The survey also reported that most Americans (54%) expect mortgage rates to rise in the next 12 months, while 7% expect them to go down and 33% expect them to stay the same.

Nearly half (49%) expect home prices to continue to climb in the next 12 months, 17% expect prices to go down, and 27% expect prices to stay the same.

About 80% of respondents said they don’t have concerns about losing their job in the next year, which is a positive for homebuying demand.

Regarding household income, a majority of respondents (57%) don’t expect their income to change in the next 12 months, while 16% expect it to decrease and 7% expect it to increase.

After considering all these factors, the HPSI decreased to 79.0 in April (down 2.7 points). The index hit a record-low of 63.0 in April 2020, as the housing market was still suffering from the dawn of the pandemic.

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