Home buying sentiment falls in July over coronavirus concerns
With coronavirus infections resurging, consumer confidence in the housing market hit a snag in July, according to Fannie Mae.
After two months of build-ups, the Home Purchase Sentiment Index [HPSI] fell to 74.2 in July, down from 76.5 in June and off a cliff from the survey high of 93.7 the year before.
"Supply constraints appear to be applying upward pressure to consumers’ home price expectations, which in turn has contributed to both a sharp reversal in optimism about whether it is a good time to buy a home and further improvement in home-selling sentiment," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release.
Positive attitudes about current buying conditions overshadowed negative feelings by 15 percentage points. However, the contingent of potential buyers who felt it was a bad time to buy grew 11 percentage points from June and 7 percentage points year-over-year.
A much starker difference came from the seller side. While consumers were basically split on whether July was a favorable time to sell a home, bad sentiment shot up 25 percentage points from a year ago and good sentiment fell 22 percentage points. In the short term, negative sentiment stayed even from June and positive sent rose 4 percentage points, likely due to intense buyer competition and rising prices.
Job loss concerns dissipated, with those worried about their employment in the next 12 months decreasing to 23% in July from 26% in June. Though that sentiment stood at only 9% in July 2019. Additionally, the net share of households reporting a significantly higher income from a year ago fell to 6% from 9% month-over-month and 21% year-over-year.
"Not surprisingly — more than any other respondent groups — renters, 18-to-34-year olds, and households earning less than $100,000 think it’s a bad time to buy a home, which we believe suggests a less favorable outlook for first-time homebuying activity," Duncan said. "In the months ahead, we continue to expect consumer sentiment to be closely linked to the country’s progress in containing the spread of the virus."