Potential homebuyers expressed more concern this month than last when it comes to their confidence in making a housing purchase. The Home Purchase Sentiment Index, calculated by Fannie Mae, fell from 72.6 in June to 71.5 in July, as just 17% of respondents claimed that now is a good time to buy a home (down from 19% in June).
Potential sellers are starting to echo the negative sentiment, though to a lesser degree, as the share of respondents who report now as a good time to sell a home has fallen month-over-month as well, from 66% to 65%. Many of these would-be-sellers are experiencing the lock-in effect, where the mortgage rate on their current home is significantly lower than what they would pay in interest on a new purchase of a similar property.
In response to the challenges of buying a home, a larger share of July survey respondents are looking to rent their next home. 35% say they would rent a home if they were going to move, up from 32% in June, and 64% say they would buy a home, down from 67% in June. With nationwide rents continuing to decrease year-over-year, the appeal of homebuying appears to be diminishing among survey respondents.
With mortgage rates hovering just under 7% throughout the month and home prices remaining near an all-time high, buyers are responding to real, major financial hurdles in front of them to buy a home. Though things are certainly tough for buyers at the moment, it does seem that they see brighter days to come.
July’s survey saw a major swing when it comes to expectations around mortgage rates. Only 31% of respondents said they thought mortgage rates will go up, the lowest share since January, and 29% of respondents said they thought mortgage rates will go down, the highest share since March. Homebuyers are savvy and keep a close eye on statements by the Fed, which has hinted at rate reductions in the coming months as fears of inflation subside. The tumble of the 10-Year Treasury Yield and the broader stock market in the first week of August suggest that these survey respondents may be onto something when it comes to moderating mortgage rates.
Subscribe to our mailing list to receive monthly updates and notifications on the latest data and research.