US Housing Sentiment Drops to Lowest in Over a Decade

By Naveen Athrappully
Naveen Athrappully
Naveen Athrappully
Naveen Athrappully is a news reporter covering business and world events at The Epoch Times.
August 9, 2022 Updated: August 9, 2022

Housing sentiment in the United States, as measured by the Fannie Mae Home Purchase Sentiment Index (HPSI), has fallen to its lowest level in more than 10 years.

In July, the HPSI declined by two points, to 62.8, the lowest level since 2011 and far below the all-time high set in 2019, according to an Aug. 8 press release. Homeowners and renters who participated in the survey expressed pessimism about current buying conditions. Only 17 percent of respondents said it is a good time to buy a home. Meanwhile, the proportion of respondents who believed it was a good time to sell a home came down, to 67 percent in July from 76 percent in May.

An index of home price growth expectations also fell, but continues to remain in positive territory. According to Doug Duncan, Fannie Mae Senior vice president and chief economist, higher mortgage rates are taking a toll on housing affordability, thus resulting in the decline in the HPSI for much of the year.

Unfavorable mortgage rates were often cited by consumers as the “top reason” for the perception that it was a bad time to buy or sell a home, Duncan stated. Consumers are indicating that selling conditions are “softening.” Fannie Mae expects the current housing conditions to remain “increasingly mixed.”

“Some homeowners may opt to list their homes sooner to take advantage of perceived high prices, while some potential homebuyers may choose to postpone their purchase decision believing that home prices may drop,” Duncan said.

“Overall, this month’s HPSI results appear to confirm our forecast for moderating home sales over the coming year,” he added.

Taking Longer to Sell

The changing market situation was reflected in a July 21 news release by real estate brokerage firm Redfin that showed that homes are taking longer to sell.

In the four weeks ended July 17, for example, a typical home remained on the market for 19 days, one more day longer than the during the same period in 2021, data showed. Total number of homes for sale also saw its biggest increase since August 2019. In addition, only 49.9 percent of home offers written by Redfin agents in June had competing offers, the lowest since May 2020.

According to Ian Shepherdson, chief economist at Pantheon Macroeconomics, homebuilders are in denial about the “extent of the drop in demand,” even though mortgage applications have been falling significantly.

“Now, they are acknowledging reality … Pretty soon, anyone who has bought a home in recent months will be sitting on a loss,” he said, according to the New York Post.

Data from the National Association of Home Builders/Wells Fargo Housing Market Index shows that the U.S. homebuilder confidence came in at 55 in July, a drop of 12 points on a monthly basis. This is the second largest drop in the index’s history.

Naveen Athrappully is a news reporter covering business and world events at The Epoch Times.