Most consumers think the economy is on the “wrong track,” growing frustrated as they struggle against inflation and a slowing economy.
Fannie Mae’s most recent Home Purchase Sentiment Index (HPSI) fell 3.4 points in June to its lowest reading in ten years, while a survey-high 81% of consumers reported they believe the economy is on “the wrong track.”
The full index is down 14.9 points YOY.
Four of its six components fell from the month prior. More Americans reported they are worried about losing their jobs in the next twelve months (+5%) and fewer reported their income has significantly increased in the past year (-1%.)
For the first time in almost seven years, a plurality of respondents said they would have difficulty getting a mortgage.
Only 20% of respondents said they think it’s a good time to buy a home. The share who think it’s a good time to sell dropped from 76% to 68%.
“In June, a survey-record 81% of consumers reported that the economy is on the wrong track, suggesting to us – and corroborated by other recently released consumer confidence measures – that people appear to be growing increasingly frustrated with inflation and the slowing economy,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
“Interestingly, consumers’ perceptions of home-selling conditions declined meaningfully in June, returning to pre-pandemic levels. This was particularly true for homeowner respondents. At the same time, consumers, especially those in prime homebuying groups, appear to be feeling the affordability pinch of higher mortgage rates: Approximately half of all respondents indicated that it would be ‘difficult’ to get a mortgage, the highest such percentage since 2014. As a whole, this month’s HPSI results are consistent with our forecast of a slowing housing market through the rest of this year and next.”
Housing affordability has hit a fifteen-year low as mortgage rates shoot up alongside continuing home price appreciation. Mortgage payments are higher than rent in 45 of the 50 largest U.S. metros, up from 22 in 2019.
Rising rates are supposed to help balance the market and bring home prices down. It’s starting to work, with sellers slashing their list prices en masse as buyers back away from the market.