Photo: Robert Clark
More Americans were reportedly less confident about the state of the housing market in July, driven by their uncertainty in the economy. The share of Americans who feel that now is a good time to sell a home fell to a record low, according to a survey released this week by Fannie Mae.
The Home Purchase Sentiment Index (HPSI), which measures overall consumer sentiment about the housing industry, fell 1.5 percentage points from the previous month to 86.8, after matching the index’s all-time high in June. July’s decline was attributed to decreases recorded in half of the six components that comprise the HPSI, says Fannie Mae.
The net share of Americans that feel now is a good time to buy a home dropped 7 percentage points to 23 percent in July from the previous month. The share who think that now is a bad time to buy hit a new survey high in July, while those who felt it was a good time to buy hit a new survey low, according to Fannie Mae.
Meantime, the net share of those who think that now is a good time to sell a home fell from June’s survey high by 11 points to 28 percent in July.
“The decline in selling sentiment was the biggest drag on the index, followed by the drop in buying sentiment,” says Fannie Mae.
Respondents cited uncertainty in economic conditions as the primary cause for the sharp decrease in selling sentiment, while nearly 50 percent of respondents cited rising prices as the primary reason they believe now is a bad time to buy — a new survey high.
“It’s clear that high home prices are a growing challenge helping to send buying sentiment to a record low,” says Doug Duncan, senior vice president and chief economist at Fannie Mae.
The HPSI gave early indications in May of this year that respondents felt like the market had become favorable to sellers, and that is unlikely to change according to Duncan.
“We continue to see a lack of housing supply as many potential sellers are unwilling or unable to put their homes on the market, perhaps due in part to concerns over finding an affordable replacement home,” he adds.
Sellers’ reluctance to put their homes on the market is helping to keep the country’s inventory tight and prices on the rise.
“We tend to see consumers expressing concern over home prices more so than inventory, and we suspect that consumers are more likely to notice the impact of tight inventory on home prices rather than the lack of inventory itself,” Sarah Shahdad, a market insights researcher at Fannie Mae, tells BuzzBuzzNews.
Americans also continued to feel that their income wasn’t “significantly” higher than it was a year ago. That component fell by 1 percentage point to 16 percent in July from the previous month.
Following June’s uptick, the net share of respondents that expected home prices to increase rose 1 percentage point to 47 percent in July.
“July’s decrease in optimism regarding the direction of the economy, which appears to coincide with rising uncertainty regarding the outlook for pro-growth legislation this year, could weigh on overall housing sentiment in the second half of the year,” says Duncan.
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