Buyer Sentiment Falls To All-Time Low As Unaffordability Remains Problematic

Americans are increasingly pessimistic about their long-term prospects in the housing market, citing unaffordability as their main concern.

Fannie Mae’s Home Purchase Sentiment Index fell 2.5 points in May to a reading of 69.4, a record low for the survey.

Just 14% of respondents believe it’s a good time to buy a home, a steep drop from the month prior’s 20%. Altogether, 86% of Americans think it’s a bad time to buy.

“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.

“While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability.” 

The share who believe it’s a good time to sell dipped as well, though most think that’s still a beneficial decision (down to 64% from 67%).

“This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future,” Duncan commented.

Consumers overwhelmingly think affordability will remain a challenge for the foreseeable future, and that both home prices and mortgage rates will rise in the next year.

The only positive outcome of the survey was a slight uptick in the number of respondents who say their income is significantly higher than it was a year ago.

Housing is a major issue for Americans of all ages, but Gen Z is particularly miffed by unaffordability. More than 90% of adult Zoomers say they will consider housing affordability when voting in November, making it a more comprehensive issue for that age group than abortion, gun rights, or foreign wars.

“Housing affordability is a cornerstone of this year’s presidential election because even though the economy is fairly strong, unemployment is low and wages are rising, buying a home feels impossible for many Americans,” said Redfin Senior Economist Elijah de la Campa.