Affordability challenges have homebuyers more cautious about the market
Consumer confidence in the housing market during December was better than it was 12 months prior but weaker than in November, according to Fannie Mae's Home Purchase Sentiment Index.
The Fannie Mae Home Purchase Sentiment Index for December 2017 was 85.8. That reading is down by two notches from the previous month but up more than five notches from December 2016.
"Consumers remained cautious in their housing outlook at the end of 2017, as tax reform discussions continued. In December, mirroring the other major consumer sentiment benchmarks, the HPSI reflected this caution and declined slightly," said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a press release.
"Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets," he added.
Consumer expectations for price increases over the next 12 months reached a high never before seen in the history of the index at 44% in December 2017.
Responses to the survey the index is based on also showed 68% of consumers are not concerned about losing their jobs, and 16% find their household incomes are significantly higher than 12 months ago.
On a net basis, the share of respondents in December 2017 who felt it's a good time to buy a home fell 5 percentage points from November and 8 percentage points from the same month in 2016 to 24%.
The net share of respondents who considered it a seller's market in December 2017 was the same as the previous month but up 21 percentage points compared to the same month the previous year at 34%.