Coronavirus housing market drops consumer confidence to 10-year low
Coronavirus-related job insecurity and economic volatility dragged consumer confidence for home buying down to its lowest point since November 2011, according to Fannie Mae.
After a then-record drop of 11.7 points in March, the Fannie Mae Home Purchase Sentiment Index plummeted 17.8 points in April. The latest decrease brought the index to 63 compared to readings of 80.8 the month before and 88.3 in April 2019.
"The 17.8-point decrease reflected consumers' deepening concerns about both their incomes and the housing market. Attitudes about whether it's a good time to sell a home fell most sharply, dropping an additional 23 points this month," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release.
A net 53% of consumers expressed no concern of losing their job over the next 12 months, receding from 54% last month and 74% the year before. Relatedly, 21% reported significantly lower household income than in the past 12 months, compared to 11% in March.
Positive attitudes about current buying conditions only outweighed negative feelings by 2 percentage points. More drastically, only 29% said it was a good time to sell compared to 52% the month before and 43% the year before.
"Sellers are understandably reluctant to list homes right now. The lack of supply should provide support for prices. But elevated concerns over job loss and income declines are suppressing demand, and that is likely to last even after states begin to reopen," Curt Long, NAFCU chief economist and vice president of research, said in a statement.
Of those surveyed who said April posed a disadvantageous time to sell, 52% credited unfavorable economic conditions and 7% attributed it to a difficult qualifying environment. An additional 5% said home prices were too low, aligning with the 2% drop in consumer expectations with regards to the home price growth rate over the next year. It was the lowest rate in survey history, according to Duncan.
"While consumers did grow more pessimistic in April about whether it’s a good time to buy a home, low mortgage rates remain a driver of purchase optimism," he said. "We expect that the much steeper decline in selling sentiment relative to buying sentiment will soften downward pressure on home prices."