BAM's Key Details
  • Fannie Mae’s Home Purchase Sentiment Index® dropped to 56.7 points, the lowest reading on record.
  • Respondents stating now is a ‘bad time to buy’ reached a survey high of 80% in October, and the ‘bad time to sell’ component continued its downward trend. 

 

The Fannie Mae Home Purchase Sentiment Index® (HPSI) dropped to a new low in October.

The HPSI had its eighth consecutive decline after decreasing 4.1 points in October, bringing the score down to 56.7. This 18.8-point decline year-over-year, and the lowest reading since the start of the HPSI in 2011, highlights the drop in consumer confidence in the housing market. 

Fannie Mae Home Purchase Sentiment Index October 2022

Highlights from the Fannie Mae Home Purchase Sentiment Index

Survey respondents shared their expectations regarding mortgage rates, home prices, changes in household income, and employment concerns. 

The survey gauges consumer confidence based on six components regarding the U.S. Housing Market and purchasing power. Those components—along with results from the October 2022 survey—are outlined below.

Buying Conditions

When it comes to buying conditions, 80% of respondents believe now is a bad time to buy, an increase from 75% in September and a survey high. In contrast, the percentage of respondents who say it is a good time to buy a home decreased from 19% to 16%.

As a result, the net share of those who say it is a good time to buy decreased 8 percentage points month-over-month.

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. Consumers are increasingly pessimistic about both homebuying and home-selling conditions. 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.

Doug Duncan

Senior Vice President and Chief Economist, Fannie Mae

Selling Conditions

Selling conditions have also decreased, though the outlook is more favorable than buying. Those who think now is a good time to buy decreased from 59% to 51% in October, while the percentage who say it’s a bad time to sell increased from 33% to 42%. 

The net share of those who say it is a good time to sell decreased 17 percentage points month over month.

Home Price Outlook

Consumers are starting to think home prices will decrease over the next 12 months. The percentage of respondents who believe home prices will go down increased from 35% to 37%, while those who think prices will continue to rise decreased from 32% to 30%. 

Twenty-six percent of respondents think home prices will stay the same, a drop from 28% last month. 

Consumers also remain concerned about the movement of home prices – expectations that prices will decrease reached a new survey high, particularly among homeowners – offering further support to our forecast of home price declines in 2023. 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.

Doug Duncan

Senior Vice President and Chief Economist, Fannie Mae

Mortgage Rate Outlook

Regarding mortgage rates, only 6% of respondents think rates will go down, a drop from 9%. Those who think mortgage rates will go up increased to 65% (1% increase).

The share who think mortgage rates will stay the same increased from 20% to 24%.

Job Loss Concern

Most respondents are not concerned with job loss—85% stated they don’t think they are at risk of losing their job, an increase from 78% last month. 

Those concerned with losing a job decreased from 21% to 15%.

Change in Household Income

The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 26% to 25%. In contrast, the percentage who say their household income is significantly lower increased from 11% to 15%.

The percentage who say their household income is about the same decreased from 61% to 60%.

Takeaways for Real Estate Agents

It’s critical to understand what consumers believe about the housing market, even if some of those beliefs are misconceptions about the market.

Understanding the fear and concerns of buyers and sellers allows you to meet them where they are. When you show up with empathy for their situation and data to educate, you can help clients see past the headlines and develop a plan to meet their goals.