Homebuyers pull back as the housing market enters sharp correction.
US consumer confidence in the housing market hit an all-time survey low in October, in line with the cooldown projected to continue in the coming months.
Fannie Mae's Home Purchase Sentiment Index (HPSI) fell for the eighth consecutive month to its lowest reading since 2011, down 4.1 points to 56.7 in October. Compared to a year ago, the index was down 18.8 points.
The HPSI components associated with home buying and selling conditions posted significant declines, as persistently high home prices and unfavorable mortgage rates continue to fuel consumers' housing affordability concerns.
The percentage of respondents who said it is a good time to buy a home decreased eight points to 16%, a new record low. The share of consumers who believe now is a good time to sell a home plunged 17 percentage points to 51% in October.
"Consumers are increasingly pessimistic about both homebuying and home-selling conditions," said Fannie Mae chief economist Doug Duncan. "Amid persistently high home prices and unfavorable mortgage rates, the 'bad time to buy' component increased to a new survey high this month, while the 'good time to sell' component continued its downward trend."
Home prices also remained a top concern for consumers. However, more homeowners expect prices to go down in line with forecasts of home price declines in 2023. Only 30% of respondents said they anticipate prices to go up, while the share of those who expect prices to drop increased to a new survey high of 37%.
"As continued affordability constraints reduce homebuyer demand, and homeowners become reluctant to sell at potentially reduced prices, we expect home sales to slow even further in the coming months, consistent with our forecast," Duncan said.
Other key findings of the October HPSI include: