Affordability issues make younger households more pessimistic
US housing sentiment sank even lower in January as affordability and supply constraints continued to limit home purchase opportunities, particularly among younger households.
Fannie Mae reported Monday that its Home Purchase Sentiment Index (HPSI) fell 2.4% month over month and 5.9% year over year to 71.8 in January – its lowest level since May 2020.
During the month, a record-low 25% of respondents said it’s a good time to purchase a home, compared to the 69% of consumers who believed that it’s a good time to sell. Concerns about job stability and mortgage rates also weighed on consumers’ minds.
“Younger consumers – more so than other groups – expect home prices to rise even further, and they also reported a greater sense of macroeconomic pessimism,” said Fannie Mae chief economist Doug Duncan. “Additionally, while the younger respondents are typically the most optimistic about their future finances, this month their sense of optimism around their personal financial situation declined.”
Four of the six HPSI components decreased month over month in January. Component highlights include: