The gap in positive answers from consumers as to whether it is a good time or buy a home or to sell one widened in December, as attitudes toward buying continued to sour. Fannie Mae’s National Housing Survey (NHS found responses to its question about buying elicited positive responses from only 26 percent of respondents (down from 29 percent in November), while 66 percent said it was a bad time, leaving net positive responses at -40 percent. This was down 5 points from November and 53 points from the same time last year. The number who responded that it was a good time to sell increased 2 points to 76 percent and bad time responses fell 4 points, raising the net 6 points to 59 percent. The net positive measure remains 51 points higher than in December 2020. The good time questions are among six asked by the NHS to construct a Home Purchase Sentiment Index (HPSI). That index declined 0.5-point month-over-month to 74.2 while it is up 0.2 percent on an annual basis. Net positive responses to three of the questions increased while three moved lower. “The HPSI’s underlying components changed dramatically in the last 12 months – particularly the two related to homebuying and home-selling sentiment – and we have seen the index drift slightly downward since March 2021, an indication that the housing market may begin to soften in the coming year,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Over the past year, low mortgage rates plus government stimulus programs helped increase mortgage demand, but the bidding-up of homes increased prices to record levels , making affordability a greater constraint for both first-time and move-up homebuyers. Among homeowners, the ‘good time to buy’ sentiment fell 30 percentage points over the past year to its current level of 30 percent; for renters it fell from 37 percent to 21 percent. Even though demand remains strong, a majority of consumers clearly have reservations about purchasing a home at current prices.”
Source: Mortgage News Daily