Homebuyers Increasingly Worried About Rising Prices, Low Inventory
A report from Fannie Mae last month showed that people were feeling worse about their homebuying prospects than they ever had before. Unfortunately, it looks like things have gotten even worse since then.
According to Fannie Mae’s latest Home Purchase Sentiment Index, a view into how consumers feel about the housing market based on a national survey, the number of people who said that now is a “good time to buy a home” fell to a record low in June – breaking the record set the previous month.
The report showed that just 32% of survey respondents said that it was a good time to buy in June, three percentage points lower than the previous record low, set in May.
Conversely, 77% of those surveyed said that it was a good time to sell their home, which is up from 67% in the previous month and demonstrates how much of a seller’s market it is right now.
As for the reason why people’s sentiments towards the housing market are what they are, Fannie Mae Senior Vice President and Chief Economist Doug Duncan said that continually rising prices coupled with perpetually low inventory are driving concern high among prospective homebuyers.
“The HPSI remained flat this month, although its underlying buy and sell components continued to diverge, setting record positive and negative readings, respectively,” Duncan said.
“Consumers also continued to cite high home prices as the predominant reason for their ongoing and significant divergence in sentiment toward homebuying and home-selling conditions,” Duncan continued.
“While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners,” Duncan added. “It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership.”
But it looks like that even home prices increases and fewer homes hitting the market won’t be enough to deter would-be buyers from trying to buy a home, at least according to Duncan.
“Despite the pessimism in homebuying conditions, we expect demand for housing to persist at an elevated level through the rest of the year,” Duncan said. “Mortgage rates remain not too far from their historical lows, and consumers are expressing even greater confidence about their household income and job situation compared to this time last year, when the pandemic had shut down wide swaths of the economy.”