Continued optimism in the sell side of the real estate market outweighed the growing negative perception on the buy side, as consumer sentiment about purchasing a home reached a new high, according to Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index for May increased 0.6 points to 92.3, the second consecutive month it set an all-time high. This is because the net percentage of consumers that think now is a good time to sell a home rose to 46%, also a new high. That was up from 45% in April, 39% in March and 32% in May 2017.
"The perception of high home prices that underlies this optimism cuts both ways, boosting not only the 'good time to sell' sentiment but also the view that it's a bad time to buy, and presenting a potential dilemma for repeat buyers," said Fannie Mae Chief Economist Doug Duncan in a press release. "For the survey's renter respondents, who are unable to reap benefits from selling a home, the HPSI has been essentially flat in the first quarter, during which home sales were also lackluster."
The net percentage of consumers that think it is a good time to buy fell to 28% in May from 29% in April and 32% in March, although it is up from 27% in May 2017.
More than half the consumers surveyed, 54%, said rates would rise in the next 12 months, while only 5% responded they would fall. Similarly, 55% of respondents said home prices will rise over the next year, while 8% said they would drop.
Fannie Mae is releasing its Mortgage Lender Sentiment Survey on June 12. The results will show lenders expect mortgage demand to soften in the near term, Duncan said.