Home shoppers have been so put off by elevated home prices and mortgage rates that buying sentiment has hit an all-time low, Fannie Mae FNMA, +3.09% said.
The agency on Monday reported that its Home Purchase Sentiment Index (or HPSI) dropped in October for the eighth time in a row. The index stands at 56.7 this month, which is the lowest monthly reading since the index was created in 2011, Fannie Mae said.
The 30-year fixed-rate is averaging at 7.29% as of Monday morning, according to Mortgage News Daily. Rates have doubled since last year, which have added hundreds of dollars in extra monthly costs to buyers.
Fannie Mae runs this survey of around 1,000 respondents every month, to assess their attitudes towards owning and renting a home, home and rental price changes, the economy, and so on.
In October, only 16% of respondents said that it was a good time to buy a home, which was a survey low.
In fact, 80% of respondents said it’s a bad time to buy a home, which rose from 75% the prior month — an all-time survey high.
Even home sellers are feeling gloomy: The share of those who believe now is a good time to sell a home dropped to 51% in October from 59% in September.
“The HPSI reached an all-time survey low this month, in line with expectations that the housing market will continue to cool in the months ahead,” Doug Duncan, senior vice president and chief economist at Fannie Mae senior vice president, said in a statement.
Homebuyers are ‘increasingly pessimistic’
“Consumers are increasingly pessimistic about both homebuying and home-selling conditions,” he added.
They are also concerned about home prices, Duncan noted. According to the survey, the share of those who believe home prices will go down in the next 12 months rose to 37% in October from 35% in September, a new survey high.
This nagging concern offers “further support to our forecast of home-price declines in 2023,” Duncan stated. Fannie Mae is expecting home sales to slow in the coming months to fall by nearly 21% by 2023.
A majority of survey respondents also expect mortgage rates to go up, to 65% in October, up from 64% in the previous month.
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