While mortgage rate optimism kept consumer confidence about the home purchase market high in June, affordability worries pulled overall sentiment lower, a Fannie Mae survey said.
Fannie Mae’s Home Purchase Sentiment Index for June was 91.5, down from 92 in May (the second highest ever) but up from 90.7 in June 2018.
“Growing expectations that mortgage rates will remain steady suggest improved stability for housing affordability and helped keep the HPSI relatively flat this month, despite modest declines in other components,” said Fannie Mae Chief Economist Doug Duncan in a press release. “Regional variations in housing optimism appear to be tied to a divergence in housing affordability; for example, home purchase sentiment is higher in the Midwest and South than in the West and, to a lesser extent, the Northeast, where the lack of entry-level inventory and the resultant strong price appreciation has had a more profound impact on affordability. With fewer consumers expecting rates to jump back up — thereby creating less urgency to buy now — we expect housing market activity to remain stable.”
The net share of consumers that said now is a good time to buy a home fell 4 percentage points from May and 5 percentage points from June 2018 to 23%. Meanwhile the net share of those that said now is a good time to sell remained at 43% for the fourth consecutive month. This is down from 47% for June 2018.
Fewer consumers surveyed said they thought mortgage rates would rise in the next 12 months, 39%, down from 43% in May and 58% one year ago, while those that thought they would go down rose to 10% from 6% in the previous month and 5% in the prior year.
When it comes to home prices over the next 12 months, on a net basis, 38% of respondents said they expected them to rise, compared with 41% in May and 46% in June.
Meanwhile, the net share of consumers that were not concerned over losing their jobs over the next 12 months fell to 73% from 76% in May and 79% in June 2018.
Fewer respondents said they would buy a home if they were to move, 63%, compared with 65% in May and 66% in June 2018. The share that would rent was flat from the previous month