Fannie Mae has conducted the National
Housing Survey every month since 2011. Among its most prominent questions are
those relating to home buying and home selling: is it a good or a bad time to
do either one? Last month the net positive responses for the good time to buy
category fell into negative territory for the first time.
The good time to sell question had plunged
into seriously negative territory (-36 percent) in the spring of last year as
the pandemic hit, but this time it remained well above water. Sixty-seven
percent of respondents viewed this as a good time to sell versus 26 percent who
did not, a net positive of 41 percent, an 8 point gain from March and up 77
points from the disastrous results during the lockdown.
However, only 47 percent of respondents
thought it was a good time to buy a home while 48 percent differed. This
dropped the net 14 points to a negative 1 percent, three points below the level
in April 2020.
The two good time/bad time questions are among
the six which Fannie Mae uses to construct its Home Purchase Sentiment Index
(HPSI). That measure fell by 2.7 points in April to 79.0. Three of the other
four components were also declined during the month, but, given the conditions
a year earlier, the HPSI was still up 16 points year-over-year.
“April’s HPSI reading appears to
have been acutely impacted by the ongoing lack of housing supply despite
improving economic conditions,” said Doug Duncan, Senior Vice President and
Chief Economist. “Consumer sentiment toward buying homes reached the lowest
level in our survey’s ten-year history; unsurprisingly, respondents
overwhelmingly cited the lack of supply and high home prices as primary reasons
for their pessimism. The decrease in homebuying sentiment likely indicates that
some consumers, potentially flush with savings – perhaps boosted in part by
stimulus payments – may be attempting, but failing, to buy a home due to
heightened competition for relatively few listed homes. Notably, consumers in
the household income range of $50,000 to $100,000, a range inclusive of the
Census Bureau’s reported median household income level, showed a particularly
large decrease in overall housing sentiment, and we know that the housing
market serving the affordable segment has been particularly competitive.”
Duncan continued, “Conversely, consumer positivity regarding home-selling
conditions nearly matched its all-time high, demonstrating a large divergence
in perceived conditions between sellers and buyers, as measured by the gap
between the two components. As has become standard discourse in the housing
industry recently, increasing the supply of homes for sale would certainly help
bring balance to this strong seller’s market, but unfortunately the most recent
data doesn’t suggest that inventory is likely to improve in the near future.”
The only increase other than the
good time to sell component was those expecting mortgage rates to decline. That
net is nearly always a negative number and in April it was -47 percent, a 1
point gain from the prior month.
The remaining components that
declined month-over-month were those reflecting the percentage of survey
respondents who say they are not concerned about losing their jobs, those who
reported an increase in household income, and respondents who expect home
prices will continue to rise.
The percentage of those not
concerned about losing their jobs over the next 12 months remained high, at 80
percent, down from 82 percent while those who expressed concern dipped 1 point
to 16 percent, knocking the net of those who were not concerned down 1 point to
Twenty-one percent reported
significantly higher household income than a year later while 17 percent says
income had fallen (the remainder reported no change.) this left a net of 4
percent with higher income, down 4 percent from the March survey.
The National Housing Survey from which
the HPSI is constructed, is conducted monthly by telephone among 1,000
consumers, both homeowners and renters. In addition to the six questions that
are the framework of the index, respondents are asked questions about the
economy, personal finances, attitudes about getting a mortgage, and questions
to track attitudinal shifts.