Americans entered the fourth quarter less optimistic about buying or selling a home than they were during the robust spring buying season, Fannie Mae reported Wednesday.
Fannie Mae’s home purchase sentiment index fell by two points in October to 85.7, a continuation of its recent downward trend. It was up 0.5 points compared with the same period in 2017.
The net share of Americans who said it was a good time to buy a home fell by five percentage points from September to 21%, while those who said it was a good time to sell a home fell by three points to 35%.
“While the October drop was broad-based — all but one of the six HPSI components declined — the net share of consumers who said it’s a good time to buy a home posted the largest decrease, tying its second lowest reading in the survey’s history,” Douglas Duncan, Fannie Mae’s chief economist, said in a statement.
The HPSI is derived from Fannie Mae’s monthly national housing survey, a telephone poll of 1,000 consumers.
The net share of Americans who said home prices would rise fell to 37%, down two points from the previous month.
Those who expected mortgage rates to go down over the next 12 months dropped by one point to -57%, and the number of respondents who said they were not concerned about losing their job fell by a point to 78%.
The final index component — those who said their household income was significantly higher than it was 12 months ago — remained unchanged at 19%.
Duncan said the continuing erosion of buying sentiment occurred despite generally positive views of the economy. “Among those who said it’s a good time to buy, 30% — a record high — cited favorable economic conditions as the reason.
“Meanwhile, the share of consumers who think the economy is on the right track continued to grow, reaching a new survey high.”
The contrast between weak home buying sentiment and overall economic optimism in the survey’s findings, Duncan said, reflects what is happening in the broader economy.
“While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion.”