Homebuyers Slightly More Optimistic About Housing Market

Homebuyers were more hopeful about the housing market in June but still largely priced out of it.

Fannie Mae’s Home Purchase Sentiment Index increased 3.2 points to a reading of 72.6 last month, pushing it closer to the plateau it set earlier in the year.

Just under 20% of consumers indicated it’s a good time to buy a home, a significant jump from May’s survey low of 14%.

The share who said it’s a good time to sell rose slightly, with more respondents saying they think home prices will increase further in the next 12 months.

The data overall suggest little immediate change in housing market participation. 

“A significant majority of consumers continue to tell us that it’s a ‘bad time’ to buy a home, and they’re also telling us that they expect both home prices and mortgage rates to move higher over the next 12 months,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist.

“Taken together, in our view, this leaves little upside to overall sentiment until meaningful progress is made on affordability – most likely in the form of either lower rates or improved supply. Of course, the flip side to a difficult purchase market is an advantageous sales market, and respondents also maintained their position that it’s a generally good time to sell, pointing to high home prices as the primary reason.”

U.S. home prices hit yet another all-time high in June, rising 5% YOY. Sellers responded, with new listings jumping by 10%, but pending sales slumped as buyers saw their potential monthly payments soar.

Major homeownership expenses now consume 35% of average wages nationwide, marking a moment of extreme unaffordability.

“The latest affordability data presents a clear challenge for home buyers,” Rob Barber, CEO of ATTOM, commented. “It’s common for these trends to intensify during the Spring buying season when buyer demand increases. However, the trends this year are particularly challenging for house hunters, more so than at any point since the housing market boom began in 2012.”

Economists at Fannie Mae expect rates to cool by year-end, producing a more affordable market and more buyer interest.

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