Home Prices Continue Climbing; Home Buying Sentiment Continues Falling
Written By: Joel Palmer, Op-Ed Writer
A record percentage of survey respondents believe it’s a bad time to buy a home at a time when home prices have reached all-time highs in 30 of the 50 largest markets.
In the latest Fannie Mae Home Purchase Sentiment Index® (HPSI), 82 percent of consumers reported that it’s a bad time to buy a home, a new survey high and up from 78 percent the previous month. This pessimism comes despite relative optimism about respondents’ job security, as 80 percent of respondents say they are not concerned about losing their job in the next 12 months.
The percentage of respondents who say home prices will go up in the next 12 months increased from 36 percent in June to 41 percent in July. The percentage of respondents who say it is a good time to sell a home remained unchanged at 64 percent. And while there was a month-to-month decrease in those who think mortgage rates will increase in the next 12 months, it still amounts to 45 percent of respondents who believe so.
“While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
“In July, a significant majority of consumers indicated that their jobs are stable and that their incomes are the same or better than they were twelve months ago. However, homebuying sentiment once again matched its all-time low. with only 18 percent telling us that it's a good time to buy a home. Additionally, we have not seen much movement in the ‘good time to sell’ component over the last few months, an indication that the current low levels of existing homes for sale will likely continue to persist in the near term, as also reflected in our latest forecast.”
Not coincidentally, Black Knight Inc, a software, data and analytics company serving the mortgage and real estate industries, reported that its Home Price Index (HPI) hit an all-time high in June, with nearly every major market experiencing month-over-month growth.
Prices have now reached new peaks in 30 of the 50 largest markets, with several northeastern metros currently 5-8 percent above 2022 highs.
“We’ve been noting for some months that the recent rate of home price gains would have a lagging, but significant, impact on the annual rate of appreciation,” said Black Knight Vice President of Enterprise Research Andy Walden. “Well, June marked that inflection point. Not only has the Black Knight HPI reached a new record high – on both seasonally adjusted and non-adjusted bases – but 60 percent of major markets have done so as well.”
Higher values have boosted homeowner equity. The company reported that total mortgage holder equity topped $16 trillion in June, with tappable equity – the amount that can be accessed while retaining a 20 percent equity stake – climbing to $10.5 trillion, within $434 billion of 2022 peaks.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
