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Americans are feeling less secure about keeping their jobs, and nearly eight in 10 think it’s a bad time to buy a home — sentiments that don’t bode well for the spring homebuying season, according to a monthly survey by Fannie Mae.
After three consecutive months of improvement, Fannie Mae’s Home Purchase Sentiment Index fell 3.6 points in February, to a level just slightly above an all-time low set last October when mortgage rates were hitting 2022 highs.
Doug Duncan
Mortgage rates are again on the rise, but the biggest factors driving the decline in homebuyer sentiment were fears about job security and rising doubts about home-selling conditions.
“With home-selling sentiment now lower than it was pre-pandemic – and homebuying sentiment remaining near its all-time low – consumers on both sides of the transaction appear to be feeling cautious about the housing market,” Fannie Mae Chief Economist Doug Duncan said in a statement. “We believe these results corroborate our expectation for subdued home sales in the coming quarters, particularly now that mortgage rates have begun rising again.”
In a Feb. 21 report, forecasters with Fannie Mae’s Economic and Strategic Research Group said they expect home sales to decline 17.6 percent this year due to tight inventories, ongoing affordability constraints, and the “lock-in effect” that’s keeping many would-be sellers on the sidelines because they don’t want to give up the low rate on their existing mortgage/
Source: Fannie Mae Economic and Strategic Research Group.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) is based on six questions from the mortgage giant’s monthly National Housing Survey, which has polled about 1,000 adults since 2010. Of the roughly 100 questions asked, six are distilled into a single number, the HPSI.
The HPSI fell 3.6 points in February, to 58.0, down 17.3 points from a year ago and approaching the all-time low of 56.7 registered in October.
While consumers were more optimistic about buying conditions and home price outlook, the remaining four components of the index — job loss concern, selling conditions, mortgage rate outlook, and change in household income — all deteriorated.
Source: Fannie Mae Economic and Strategic Research Group.
With unemployment still low and many employers having trouble filling job openings, only 24 percent of those surveyed in February said they were concerned about losing their job in the next 12 months. That’s up from 18 percent in January, however, and the percentage who said they were not concerned about losing their job fell 9 percentage points, to 73 percent. In total, the net share who said they were not concerned about losing their job decreased 15 percentage points from January to February.
Duncan said Fannie Mae forecasters will continue to monitor concerns about job security closely, “since labor market uncertainty could play yet another factor in slowing housing activity.”
Source: Fannie Mae Economic and Strategic Research Group.
While home prices in many markets are retreating from all-time highs, most of those polled by Fannie Mae in February still thought it was a good time to sell a home.
But the percentage of respondents who said it was a good time to sell a home decreased from 59 percent in January to 54 percent in February. With the percentage who said it’s a bad time to sell increasing from 39 percent to 44 percent, the net share of those who said it’s a good time to sell decreased 10 percentage points from January to February.
Source: Fannie Mae Economic and Strategic Research Group.
With mortgage rates still below 2022 highs, the percentage of respondents who said it is a good time to buy a home increased from 17 percent in January to 20 percent in February. The percentage who said it was a bad time to buy decreased from 82 percent to 79 percent. In total, the net share of those who said it was a good time to buy increased 5 percentage points from January to February.
Source: Fannie Mae Economic and Strategic Research Group.
While most of those surveyed by Fannie Mae don’t expect home prices to go up in the next 12 months, the percentage who say home prices will go down decreased from 37 percent in January to 35 percent in February. With 33 percent expecting home prices to stay the same, up from 30 percent in January, the net share of those who said home prices will go up increased 1 percentage point from January to February.
Source: Fannie Mae Economic and Strategic Research Group.
While many forecasters expect mortgage rates to decline over the next 12 months, only 15 percent of consumers surveyed by Fannie Mae in February think the same. With the percentage who expect mortgage rates to go up increasing from 52 percent in January to 55 in February, the net share of those who say mortgage rates will go down over the next 12 months decreased 1 percentage point.
Source: Fannie Mae Economic and Strategic Research Group.
The percentage of respondents who said their household income was significantly higher in February than it was 12 months ago remained unchanged at 22 percent, while the percentage who said their household income is significantly lower increased from 10 percent to 12 percent. The net share of those who said their household income was significantly higher than it was 12 months ago decreased 1 percentage point from January to February.
Source: Fannie Mae Economic and Strategic Research Group.
Although not factored into HPSI, the National Housing Survey also asks consumers whether they think the economy is on the wrong track. Although most consumers continue to think the economy is on the wrong track, 28 percent said it was on the right track in February, up from 14 percent in June.
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