In April, the Fannie Mae Home Purchase Sentiment Index ticked up slightly to 69.2, a slight improvement from March (68.1) but still a decline from April of last year (71.9). The component of the survey holding the overall index back is seller sentiment. The share of respondents who said now is a good time to sell a home fell from 64% to 58% this month while the share of respondents who said now is a bad time to sell a home jumped from 34% to 41%. This is the least confident that sellers have been since the first quarter of 2023. Given the slowing of existing home sales in the most recent data from NAR, it is not surprising that sellers are feeling some trepidation. Home sales are slowing, listing prices are flat, and price reductions are at their highest level for any April since at least 2016. At the same time, though, buyer sentiment does not seem to be as responsive to these market conditions. 77% of survey respondents still said that now is a bad time to buy a home, a level of response that has been remarkably consistent over the past three years.
Some of the concern from buyers appears to be more about their own financial situation rather than the state of the housing market, which is generally moving in their favor. 31% of respondents expect their personal financial situation to get worse over the next twelve months, which matches an all-time survey high from June 2022. This concerning result has been steadily building up throughout the year, rising from 15% in January to 22% in February and 27% in March. The economic fallout from tariff announcements has shaken the confidence of today’s prospective homebuyers. Similarly, 25% of respondents indicated that they are concerned about losing their job in the next twelve months, a retreat from the 32% level from last month (which appears to be a bit of a blip on the radar), but still higher than any other reading in the past year. Consumer confidence is essential to the health of the housing market: when prospective buyers feel financially secure, they are far more likely to make a home purchase. Overall economic conditions are a clear threat to home sales this year, and 67% of respondents feel like the economy is on the wrong track.
Though the broader economy is having a clear negative impact on consumer sentiment, respondents’ expectations about housing market fundamentals are more mixed. 26% expect mortgage rates to go down, 36% expect them to go up, and 37% expect them to remain the same. This nets out to the most pessimistic outlook on mortgage rates in over a year. The market turmoil of recent months has made predicting mortgage rates more difficult, so consumers are right to carry some uncertainty on this front. The share of respondents who expect home prices to rise remained elevated at 44%, while 33% expect them to stay the same and 23% expect them to go down. Recent data suggests that home prices are stabilizing, and the influx of new inventory is helping them stay in place at a national level, but there are certainly some markets where home prices are rising. Overall, this may represent sellers having unrealistic expectations about the prices their homes can fetch on the market, which we see happening in the level of price reductions nationwide.
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