A record number of Americans believe it's a bad time to buy a home, even though many are feeling good about their financial situations.
In the latest survey from Fannie Mae measuring housing sentiment, 82% of respondents said now is a bad time to purchase a house — a record high. That’s up from 78% in June. Only 18% believed it was a good time to buy.
At the same time, Americans are feeling better about their employment situation. The net share of respondents who are not concerned about losing their jobs increased to 60%, climbing 6 percentage points month over month.
The results underscore the dichotomy between the economy and housing market, with folks still experiencing affordability challenges as home prices rise and interest rates remain elevated.
Read more: What the Fed rate hikes mean for mortgages and loans
"In July, a significant majority of consumers indicated that their jobs are stable and that their incomes are the same or better than they were 12 months ago," Doug Duncan, Fannie Mae senior vice president and chief economist, said about the report. "It’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability."
"We have not seen much movement in the 'good time to sell' component over the last few months," Duncan said, "an indication that the current low levels of existing homes for sale will likely continue to persist in the near term."
The number of individuals who say home prices will go up increased in July, according to Fannie Mae's index. A net 17% of survey respondents are forecasting price gains in the next 12 months, up from 11% from the month before. The number of respondents who believe prices will continue to climb has steadily risen since January 2023.
They have good reason to think so.
A home price index from Black Knight, a mortgage tech and data provider, showed that nearly every major market experienced price growth month over month in June on a seasonally adjusted basis. Of the 50 markets tracked, only two metros — Austin and San Antonio, both in Texas — saw price declines.
"We’re also anticipating the annual rate of home price growth to inflect and trend higher beginning in June," Andy Walden, vice president of enterprise research strategy at Black Knight, told Yahoo Finance.
Another housing report echoes a similar sentiment. Nationwide home prices are forecasted to climb 0.6% month over month in July and 4.6% on an annual basis from June 2023 to June 2024, according to CoreLogic August 2023 Insight report.
While an inventory squeeze has kept home prices elevated, the bullish outlook can also be attributed to the nation’s resilient economy and strong labor market.
"While the continued imbalance between buyers and sellers continues to pressure home prices, June’s annual bump in price growth echoes economic resiliency, a thriving US job market, and strong consumer spending," Selma Hepp, CoreLogic’s chief economist, said in the report.
Many more Americans seem to believe that mortgage rates are finished rising. The share of people who said mortgage rates will go down or stay the same increased, while the percentage who expect rates to rise shrunk.
The expectation in rate change has calmed compared with the last 12 months, when more than half — or 61% — of Americans believed rates were jumping.
Still, elevated borrowing costs continue to be a major affordability concern among buyers. Lenders, too, are tightening their requirements. An index from the Mortgage Bankers Association (MBA) measuring mortgage credit availability decreased in July.
"Mortgage credit availability declined to its lowest level since 2013, as lenders pulled back on underutilized loan programs and as liquidity concerns remain for some jumbo lenders," said Joel Kan, MBA’s deputy chief economist, in a statement.
As a result, mortgage balances in the second quarter were largely unchanged from the previous quarter and stood at $12.01 trillion at the end of June, according to data released Tuesday by the Federal Reserve Bank of New York.
"Unsurprisingly, consumers continue to attribute the challenging conditions to high home prices and unfavorable mortgage rates," Duncan said.
"After seeing rates rise to 7% in early July," Andy Walden, vice president of enterprise research strategy at Black Knight, told Yahoo Finance, "rate lock volumes have seen a modest rebound in recent weeks, but remain more than 25% below their 2018 and 2019 averages, suggesting demand continues to remain subdued due to affordability still hovering near 37 year lows."
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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