BAM Key Details:
- Fannie Mae has released their Home Purchase Sentiment Index report for June 2023, showing a monthly increase of only 0.4 points to 66.0, as buyers still contend with both limited housing supply and affordability challenges.
- The slight uptick in the HPSI is due to net increases in two components and net decreases in three components. The full index rose 1.2 points year over year.
- The share of respondents saying they would buy if moving decreased by 4% to 67%, while the share saying they would rent increased 4% to 32%.
Fannie Mae just released its June 2023 Home Purchase Sentiment Index, with an anemic 0.4% increase to 66.0, reflecting the market’s ongoing challenges with housing supply and affordability.
Behind that slight uptick are net increases in two components—Buying Conditions and Change in Household Income—and net decreases in three components:
- Selling Conditions
- Mortgage Rate Outlook
- Job Loss Concerns
Home Price Outlook held steady from May to June, despite record low inventory exerting upward pressure on home prices across the U.S.
The full index sits 1.2 points higher than its value from one year ago.
Source: Fannie Mae
The HPSI Components
Here’s a quick breakdown of the changes in each HPSI component:
- The net share of respondents saying it’s a good time to buy rose by five percentage points month over month to -56%. That said, a significant majority of respondents still believe it’s a “bad time to buy” a home, as they have since mid-2021.
- The net share of those saying it’s a good time to sell dropped three percentage points to 28%.
- The net share saying home prices will go up held steady at 11% from May.
- The net share saying mortgage rates will go down over the next 12 months dropped one percentage point to -32%.
- The net share of employed respondents saying they’re not concerned about losing their job fell one percentage point to 54%.
- The net share saying their household income is significantly higher compared to one year ago rose one percentage point to 9%.
Source: Fannie Mae
Confidence in the housing market appears to have plateaued at a relatively low level, suggesting that many consumers may be coming to terms with elevated mortgage rates and high home prices. Home prices continue to be supported by the tight supply of homes available for sale, and, compared to the end of last year, fewer respondents today believe home prices will decrease over the next 12 months. Additionally, consumers’ mortgage rate expectations have tempered: A larger share of respondents think mortgage rates will stay the same over the next year, whereas mid-to-late last year, most thought rates would continue going up. This seems to signal that consumers are adapting to the idea that higher mortgage rates will likely stick around for the foreseeable future. We continue to forecast home sales to slow in the second half of the year, compared to the first half, due to ongoing affordability constraints and lack of housing supply.
Buy vs. rent
The percentage of respondents saying they would purchase a home if they were going to move fell four percentage points to 67%, while the share saying they would rent climbed four percentage points to 32%.
Source: Fannie Mae
More consumers expect their financial situation to improve
The share of respondents saying they expect their personal financial situation to improve rose one percentage point to 31%, while those who expect it to get worse dropped three percentage points to 19%.
The share saying they expect it to remain the same rose three percentage points to 50%, getting closer to the survey high seen two months ago in April 2023.
Source: Fannie Mae
Takeaways for real estate agents
Whatever’s going on in your local market—with the general trends in consumer sentiment you’re observing among your clients and prospects—it’s more important than ever to be the knowledge broker for your community.
And that means educating yourself on what’s really going on in the housing market, behind the headlines, so you can provide clear, helpful answers to the questions consumers are asking.
If you don’t step up and be the resource they need, they’ll get their news from sources that are less invested in getting to the truth and sharing it with as many as possible.
