Consumer housing confidence falls again as economic doubts rise
Though still comparatively strong, consumer confidence in the housing market dropped again in October in response to economic uncertainty and lack of affordability, according to Fannie Mae.
Fannie's Home Purchase Sentiment Index declined for the second straight month after hitting an all-time high in August. The index fell to 88.8 from a reading of 91.5 in September, but was up from 85.7 a year ago.
Five out of the six sentiment components fell month-over-month, with the 7-percentage-point drop in net share of consumers believing it's a good time to buy representing the largest decrease. Only 21% consider housing a buyer's market even though job confidence rose, increasing three points to 72%.
"The 'good time to buy' component has declined notably, despite low mortgage rates, due in part to the persistent challenge of a lack of affordable housing supply. In turn, the net share of consumers expecting home prices to increase over the next 12 months has fallen to its lowest reading in seven years. Still, low mortgage rates and a strong labor market are supporting the index's overall strength, which is consistent with our expectation for a modest expansion in home purchase activity in the fourth quarter," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release.
While the HPSI ticked down twice in the last two months, it still sits at a relative high point. This marks the best October the index recorded since its release in 2011.
"Consumer home purchase sentiment remains robust, with the HPSI still near its survey high despite dipping for a second consecutive month," Duncan said.