A new study by Fannie Mae FNMA shows that people are fed up with the housing market and are less interested in buying a home than ever before.
The monthly Home Purchase Sentiment Index dropped 2.5 points to 69.4 in May, mostly because of how people felt about buying a home, a government-backed business said on Friday. The National Housing Survey from Fannie Mae, which goes back to 2010, is used by the HPSI.
It was 86% of people in May who said it was a bad time to buy a house, up from 79% the month before.
The bad mood also affected sales. The number of people who think now is a good time to sell dropped from 67% in April to 64% now.
“Consumer sentiment toward housing declined from its recent plateau as more and more consumers struggle to find the good things about the current housing market,” said Doug Duncan, Fannie Mae’s chief economist.
Also, “current sentiment reflects pent-up frustration with the overall lack of purchase affordability,” Duncan told me.
A lot of people think that home prices and mortgage rates will stay high. In fact, 42% of those surveyed think that home prices will go up in the next 12 months. Another 42% think that mortgage rates will stay the same. As of Thursday, Freddie Mac said that the average rate for a 30-year mortgage was 6.99%.
There are early signs that the housing market may be about to turn around. For example, inventory is rising in 90% of the U.S., and the lock-in effect is becoming less strong.
Because of the loosening of the lock-in effect, Fannie Mae thinks that the home supply will pick up soon. The lock-in effect is when the number of homes for sale is slowed down compared to normal because people with very low mortgage rates don’t want to take out a new loan with a higher rate. The Fannie Mae study found that 84% of people who answered said the lock-in effect is weakening, which is leading to more ads.
The National Association of Realtors says that the median price of a used home in April was $407,600, while the median price of a new home was $433,500.