Sezeryadigar/iStock via Getty Images
Housing sentiment in the U.S. for last month returned closer to its record low after three straight monthly increases, as mortgage rates reaccelerated during the period, and consequently dampened affordability, according to a survey conducted by Fannie Mae (OTCQB:FNMA) on Monday.
In February, the Home Purchase Sentiment Index slid 3.6 points to 58.0, returning to near its all-time survey low set in October 2022. The index is down 17.3 points from the year before.
“The decline was partly driven by a substantial decrease in consumers’ sense of home-selling conditions, with most respondents who indicated it’s a ‘bad time to sell’ citing unfavorable economic conditions and mortgage rates as the primary reasons for that belief,” said Doug Duncan, Fannie Mae senior vice president and chief economist.
Four of the HPSI’s six components decreased month-over-month, chiefly those associated with home-selling conditions and job security, underscoring the notion that “labor market uncertainty could play yet another factor in slowing housing activity,” Duncan added.
The percentage of respondents who reported concerns about losing their job in the next 12 months accelerated to 24% from 18%, the survey showed.
The net share of respondents who said it’s a good time to buy increased 5 percentage points M/M, while the net share of those who said it’s a good time to sell decreased 10 percentage points.
The poor housing sentiment comes at a time when mortgage rates are being propped up by the Federal Reserve’s interest-rate increases, and home prices remain high (vs. pre-pandemic levels) as inventory stays low. That dynamic doesn’t bode well for monthly mortgage payments.
Still, higher mortgage rates drove the share of million-dollar homes down to just over 7% in January from June 2022’s all-time high of 8.6%, according to a recent report from Redfin (RDFN). The share, though, is still up from 4.2% just before the pandemic began.
On Monday, Black Knight said home prices declined at the smallest rate in the past seven months.