On Monday (5-9-22), Fannie Mae reported its Home Purchase Sentiment Index (HPSI) for April. The HPSI was down -4.7 points to a reading of 68.5 in April, its lowest level since May 2020, as consumers expressed growing concerns about housing affordability and rising mortgage rates.
All six components of the HPSI were down month-over-month, with a survey-high of 76% of respondents indicating that they believe it is a bad time to buy a home, up from 73% in March. Furthermore, 73% of respondents expected mortgage rates to continue to push higher over the next 12-months, also a HPSI high. Year-over-year (April 2021 – April 2022), the full HPSI is down -10.5 points.
In a statement prepared to accompany the HPSI for April, Fannie Mae’s Senior Vice President and Chief Economist, Doug Duncan, said:
“In April, the HPSI fell to its lowest level since the first few months of the pandemic, as consumers continue to report difficult homebuying conditions amid the budget-tightening constraints of inflation, higher mortgage rates, and high home price appreciation. The current lack of entry-level supply and the rapid uptick in mortgage rates appear to be adversely impacting potential first-time homebuyers in particular, evidenced by the larger share of younger respondents (aged 18- to 34) reporting that it’s a ‘bad time to buy a home.’
Additionally, consumer perception regarding the ease of getting a mortgage also decreased across nearly all surveyed segments this month, suggesting to us that the benefit of the recent past’s historically low mortgage rate environment appears to have diminished, and affordability is poised to become an even greater constraint going forward. This sentiment is consistent with our forecast of decelerating home sales through the rest of 2022 and into 2023.”
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Consumer Sentiment Toward Housing Hits Lowest Level in Two Years