Buying sentiment softens in latest Fannie Mae monthly survey

Consumer attitudes toward the housing market and economy remained steady in April, according to the latest monthly survey from Fannie Mae. However, Americans were less likely to consider it a favorable time to purchase a home.

Fifty-three percent of respondents in the April survey said they consider it a good time to buy a home, down 3 percentage points from March and 8 percentage points from April 2018. Thirty-nine percent considered it a bad time to buy a home, up 5 percentage points from the previous month and 7 percentage points from the previous year.

Fannie Mae said the more pessimistic attitudes toward buying were the main reason for a drop in the Home Purchase Sentiment Index, which fell to 88.3 – down 1.5 points from March and 3.4 points from April 2018. The index is based on six factors in the monthly survey, including whether it is a good time to buy or sell a home, expected changes to home prices and mortgage rates, job security, and changes to household income.

"Households remain upbeat about economic activity but have more mixed attitudes toward the housing market," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "While home selling confidence remains strong and more consumers on net expect mortgage rates to decline over the next year, respondents walked back some of their buying optimism from March. Improving perceptions of income gains and a softening home price growth outlook should help support housing demand. However, increasing expectations among consumers that mortgage rates will continue to be favorable for some time will likely gain additional support following last week's Fed meeting – and may also be reducing their urgency to buy."

Fifty-five percent of respondents said they thought it would be easy for them to get a mortgage, down from 58 percent in the previous month but up from 54 percent in the previous year. Forty-two percent said they thought it would be difficult to get a mortgage, up 2 percentage points from March but down 1 percentage point from April.

The share of respondents expecting mortgage rates to increase has been steadily falling, from a recent high of 61 percent in October to 46 percent in April; this share was also a year-over-year drop of 8 percentage points. The share of respondents expecting mortgage rates to go down held at 6 percent.

Sixty-seven percent said they would buy their next home if they were to move, down 2 percentage points from the previous month but up 1 percentage point from the previous year. Twenty-nine percent said they would rent their next home, up 3 percentage points from March and 1 percentage point from April 2018.

Sixty-one percent said they believe home rental prices will go up in the next 12 months, the same share as in the previous year and up 2 percentage points from March. Two percent said they think rental prices will drop, down 2 percentage points from the previous month to match the same share as in April 2018. On average, respondents expected rents to increase by 4.6 percent – up from expectations of 4.1 percent in the previous month and 5.7 percent in the previous year.

Respondents continued to view the housing market as favorable to sellers, with 67 percent saying they thought it was a good time to list a property. This was up 1 percentage point from the previous month but a year-over-year drop of 1 percentage point. Twenty-four percent considered it a bad time to sell a home, up 1 percentage point from both the previous month and previous year.

Fewer people expected home price growth to continue in the next 12 months, with 45 percent saying they think this trend to occur – down 4 percentage points from March and 10 percentage points from April 2018. Nine percent said they thought home prices will drop, down 2 percentage points from the previous month but a year-over-year increase of 3 percentage points.

On average, respondents expected that home prices will grow 2.4 percent in the next 12 months. This was down slightly from expectations of 2.5 percent growth in the previous month and 3.9 percent growth in the previous year.

Respondents were more likely to express concern about their job security, with 87 percent saying they were worried about losing their job in the next 12 months – down 3 percentage points from the previous month and 1 percentage point from the previous year. Thirteen percent said they were concerned about potential unemployment, up from 10 percent in March and 12 percent in April 2018.

Thirty-two percent said their household income was significantly higher than it was 12 months ago, up 5 percentage points from the previous month and 4 percentage points from the previous year. Ten percent said their income is significantly lower, unchanged from both the previous month and previous year.

Fifty-one percent said they expect their personal financial situation to improve over the next 12 months, up 1 percentage point from March but down 3 percentage points from April 2018. Eight percent said they think their financial situation will worsen, down 2 percentage points from the previous month and 3 percentage points from the previous year.

Opinions on the economy remained relatively unchanged. Fifty-two percent said they think the economy is on the right track, up 1 percentage point from both the previous month and previous year. Thirty-seven percent said they think the economy is on the wrong track, down 2 percentage points from March and 1 percentage point from April 2018.

The Fannie Mae National Housing Survey polls a representative sample of 1,000 households via telephone each month. Respondents are asked more than 100 questions to gauge perceptions on the housing market and economy.

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