Fannie Mae’s Home Purchase Sentiment Index® for March Indicates Consumer Pessimism Toward Home Buying Has Grown

Fannie Mae on Thursday (4-7-22) reported its Home Purchase Sentiment Index® (HPSI) for March. According to the HPSI, consumer home purchasing sentiment declined by 2.1 points in March to a reading of 73.2. Year-over-year, the HPSI is down 8.2 points.

Overall, four out of the six components that make up the HPSI declined month-over-month, including the components asking consumers whether they expected mortgage rates to go up and whether they believe it’s a good time to buy a home.

In March, a survey-high 69% of respondents indicated that they expect mortgage rates to continue their upward ascent. On net, the “Good Time to Buy” component set a new survey low, with 73% of respondents reporting that it’s a bad time to buy a home.

In a statement prepared for the release of the March HPSI, Fannie Mae Vice President and Deputy Chief Economist Mark Palim said:

“The ‘Good Time to Buy’ component of the index reached yet another record low, with high home prices, rising mortgage rates, and macroeconomic uncertainty serving as consumers’ chief concerns. Only 24% of consumers believe it’s a good time to buy a home, with similar levels of pessimism expressed by nearly all of the demographic groups surveyed.

This month, we also saw a survey-high share of consumers expecting their financial situations to worsen over the next year; this was especially true among current homeowners. These concerns, together with the run-up in mortgage rates since the end of 2021, will likely diminish mortgage demand from move-up buyers—and fewer move-up buyers mean fewer available entry-level homes, adding to the rising-rate challenges for potential first-time homebuyers. If consumer pessimism toward homebuying conditions continues and the recent mortgage rate increases are sustained, then we expect to see an even greater cooling of the housing market than previously forecast.”

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