High Home Prices Continue to Weigh on Homebuying Sentiment

WASHINGTON – The Fannie Mae Home Purchase Sentiment Index® (HPSI) dropped 1.2 points to 74.5 in September, as survey respondents continued to report divergent opinions of homebuying and home-selling conditions.

Overall, three of the index’s six components decreased month over month. Most notably, an even greater share of consumers reported that it’s a bad time to buy a home – with that number now sitting at 66% last month and significantly higher than the 28% of respondents who believe it’s a good time to buy. The home-selling conditions component remained mostly flat, with a strong majority of consumers maintaining that it’s a good time to sell. Year over year, the full index is down 6.5 points.

“The HPSI declined slightly this month but remains within the general bounds we’ve seen since the end of last year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The survey’s story is also largely unchanged: Consumers feel it’s a bad time to buy a home but a good time to sell – and they continue to cite high home prices as the primary reason.

“Across all consumer segments, renters and younger consumers were slightly more likely to indicate it’s a bad time to buy, perhaps a reflection of their generally lower incomes and their observation that the availability of affordable homes is lacking. We’re also seeing a softening in consumers’ expectations that home prices will continue to increase; however, in our view, other housing market fundamentals remain supportive of further home price appreciation – including low levels of inventory and low interest rates.”

Home Purchase Sentiment Index highlights

Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in September by 1.2 points to 74.5. The HPSI is down 6.5 points compared to the same time last year.

Good/bad time to buy: The percentage of respondents who say it is a good time to buy a home decreased from 32% to 28%, while the percentage who say it is a bad time to buy increased from 63% to 66%. As a result, the net share of those who say it is a good time to buy decreased 7 percentage points month over month.

Good/bad time to sell: The percentage of respondents who say it is a good time to sell a home increased from 73% to 74%, while the percentage who say it’s a bad time to sell remained unchanged at 19%. As a result, the net share of those who say it is a good time to sell increased 1 percentage point month over month.

Home price expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 40% to 37%, while the percentage who say home prices will go down remained unchanged at 24%. The share who think home prices will stay the same increased from 31% to 33%. As a result, the net share of Americans who say home prices will go up decreased 3 percentage points month over month.

Mortgage rate expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 8%, while the percentage who expect mortgage rates to go up decreased from 53% to 51%. The share who think mortgage rates will stay the same decreased from 35% to 33%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 4 percentage points month over month.

Job concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 82% to 81%, while the percentage who say they are concerned increased from 15% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 2 percentage points month over month.

Household income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 26% to 27%, while the percentage who say their household income is significantly lower increased from 12% to 13%. The percentage who say their household income is about the same decreased from 59% to 57%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago remained unchanged month over month.

Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 respondents via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010).

The September 2021 National Housing Survey was conducted between Sept. 1 and Sept. 26, 2021.

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