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    Sunday, June 16, 2024

    Home buying optimism soars in latest Fannie Mae survey

    Attitudes toward the housing market improved in June as Americans demonstrated a more positive outlook on home buying conditions, according to the latest National Housing Survey from Fannie Mae. However, the company said it is unclear what effect this result might have on the market due to ongoing economic pessimism and individual preferences on whether it is preferable to speed up or delay a home purchase.

    Fannie Mae's Home Purchase Sentiment Index—which is based on six factors from the survey including perceptions of home buying and selling conditions, expected changes to home prices and mortgage rates, perceived job security, and change in household income over the past year—stood at 76.5 in June. While this measure was up nine points compared to May, it was also a year-over-year drop of 15 points.

    "A second month of improvement in June allowed the HPSI to regain some of the sharp losses in optimism observed in March and April," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The share of renters who say it's a good time to buy a home is now at its highest level in five years, suggesting favorable conditions for first-time homebuying, consistent with the recent rebound in home purchase activity. Homeowners seem to have taken note of the resulting lack of housing supply, with an increased share saying it's a good time to sell a home. However, this activity may cool again in the coming months, depending on the extent to which it can be attributed to consumers having chosen to delay or to accelerate homebuying plans due to the pandemic."

    Sixty-one percent of respondents considered it a good time to buy a home, up 9 percentage points from May and 5 percentage points from June 2019. Twenty-seven percent considered it a bad time to buy, down 12 percentage points from the previous month and 6 percentage points from the previous year.

    Thirty-two percent said they think mortgage rates will go up over the next 12 months, up from 25 percent in May but down from 39 percent in June 2019. Seventeen percent said they think rates will decrease, falling 8 percentage points from the previous month but up 7 percentage points from the previous year.

    Forty-three percent said they think home rental prices will increase in the next 12 months, up 9 percentage points from May but down 14 percentage points from June 2019. Thirteen percent said they expect rents to go down, unchanged from the previous month and a year-over-year increase of 10 percentage points. The average respondent expected rental prices to increase by 2.2 percent over the next 12 months.

    Sixty-nine percent said they would buy a home if they were to move, up 3 percentage points from the previous month and 6 percentage points from the previous year. Twenty-six percent said they would rent their next home, down 2 percentage points from May and 5 percentage points from June 2019.

    Fifty-five percent said they thought it would be easy for them to get a mortgage, down 2 percentage points from the previous month and 4 percentage points from the previous year. Thirty-eight percent said they thought it would be difficult to get a mortgage, up 1 percentage point from May but down 2 percentage points from June 2019.

    Respondents continued to believe it was a bad time to sell a home, with 48 percent holding this view. The share was up 26 percentage points on an annual basis, but also down 14 percentage points from May. Forty-one percent thought it was a good time to sell, up 9 percentage points from the previous month but down 26 percentage points from the previous year.

    Thirty-four percent said they think home prices will increase in the next 12 months, up 8 percentage points from the previous month but a year-over-year drop of 14 percentage points. Twenty-five percent said they think prices will decrease in the next 12 months, down 10 percentage points from May but up 15 percentage points from June 2019. On average, respondents expected home prices to fall 0.4 percent in the next 12 months.

    Economic worries persisted in June, with 26 percent saying they were worried about potentially losing their job in the next 12 months – up 2 percentage points from May and double the share in June 2019. Seventy-four percent said they were not worried about unemployment, down 1 percentage point from the previous month and 12 percentage points from the previous year.

    "Survey respondents' persistent, substantially elevated concerns about job security in the face of record unemployment remains a key takeaway, particularly among renters and homeowners with a mortgage," said Duncan. "We believe the continuing uncertainty regarding the coronavirus' containment suggests an uneven and potentially volatile course toward economic recovery."

    Twenty-five percent said their household income is significantly higher than it was 12 months ago, up 7 percentage points from May but a year-over-year drop of 4 percentage points. Sixteen percent said their income is significantly lower, down 3 percentage points from May and up 7 percentage points from June 2019.

    Forty-one percent said they think their personal financial situation will improve in the next 12 months, unchanged from the previous month but down 12 percentage points from the previous year. Twelve percent said they think their personal financial situation will worsen, down 2 percentage points from May and a year-over-year increase of 4 percentage points.

    Thirty-three percent said they think the U.S. economy is on the right track, improving 4 percentage points from May but down 19 percentage points from June 2019. Fifty-seven percent said they think the economy is on the wrong track, 3 percentage points lower than the previous month and 17 percentage points higher than the previous year.

    Fannie Mae's National Housing Survey polls approximately 1,000 Americans each month to gauge shifting attitudes toward the housing market and economy. Respondents are interviewed via telephone and asked more than 100 questions.

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