Consumer optimism about purchasing a home continued to fade in July, as low inventory, rising prices and higher interest rates are affecting their market perception, Fannie Mae said.
"Home purchase sentiment seems to have reached a plateau, with potential home sellers likely struggling to find a home to buy amid slow supply growth, expectations for rising mortgage rates and significant home price increases," Doug Duncan, Fannie Mae senior vice president and chief economist, said in a press release.
"Survey respondents cite 'high home prices' as the top reason why it is both a good time to sell a home and bad time to buy a home. This suggests a contributing factor to the low supply of existing homes for sale is that current owners are reluctant to trade up in a rising price market. Additionally, the shares of consumers citing favorable mortgage rates as a reason why it's a good time to buy or sell a home both dropped to fresh survey lows."
The net share of consumers that considered July a good time to sell a home fell to 41% from 47% in June (a survey high), while those that considered it a good time to buy fell to 24% from 28% during the same period.
Fewer respondents thought home prices would increase in the next 12 months, 49% compared with 55% one month prior, while 10% said prices would go down, up from 9%. The net share of 39% feeling prices would rise is the first time since December 2016 that it was under 40%.
But respondents remained pessimistic about mortgage rates, with 58% stating they would increase in the next 12 months, unchanged from June. Meanwhile, 6% felt they would decrease, up from 5%.
The HPSI component that measures job security decreased 11 percentage points in July. Even though 82% of respondents said they were not concerned about losing their job in the next 12 months, it was down from 88% in June. At the same time, 17% said they were concerned, up from 12% in June.