Consumer Confidence in the Housing Market Remains Close to Historic Lows

Fannie Mae on Friday (4-7-23) reported the results of its Home Purchase Sentiment Index® (HPSI) for March. According to Fannie Mae, the HPSI increased 3.3 points in March to a reading of 61.3, but it still remains only slightly above its all-time low set late in late 2022.

Overall, four of the HPSI’s six components increased month-over-month, most notably those associated with home-selling conditions and consumer’s sense of job security. While the former component remains marginally positive on net, 40% of consumers reported it was a bad time to sell a home in March, down from 44% in February. Twenty-one percent expressed concerns about losing their job in the next 12 months, which is down from 24% last month. Year-over-year, the full HPSI is down 11.9 points.

Adding additional background and his analysis to the March HPSI, Fannie Mae’s Vice President and Deputy Chief Economist Dr. Mark Palim said:

“Despite the recent banking turbulence, the HPSI increased modestly in March, although it still remains nears its historical low. With the spring homebuying season now upon us, a large majority of consumers continue to believe that it’s a bad time to buy a home. Homeowners sharing this belief frequently cited ‘unfavorable mortgage rates,’ as the primary reason for their pessimism, further corroborating the often-discussed disincentive—or ‘lock-in-effect’—that many mortgaged holders who may be considering moving have towards giving up their lower rates. By contrast, surveyed renters once again indicated that high home prices are their primary concern for buying a home.”