Consumers are pessimistic with income growth stagnant
Fannie Mae’s Home Purchase Sentiment Index dropped 2.1 points in June as more consumers reported mixed views on housing and income growth.
The share who said it is a good time to sell a home increased 5 percentage points to a survey high of 18 percent and those who said it is a good time to buy rose 3 points to 32 percent, but the share of consumers who expect home prices to go up dropped 9 percent points and the number who said they are not concerned about losing their jobs fell 4 points.
Also, fewer consumers reported a positive outlook on the state of the economy – those who think the economy is on the wrong track ticked up to 59 percent in June.
“Pending home sales have pulled back in the face of continued home price growth, and we’re seeing some softening in the higher priced components of the market,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Growing pessimism about the overall direction of the economy gives us further pause as it now stands at the highest level we’ve seen in our National Housing Survey in the last two years. Meaningful improvement in the housing market going forward will likely require consistent upward movement in consumers’ income growth perceptions, which have thus far been stagnant. Also helpful would be an acceleration of supply accumulation of entry-level homes, which would moderate the growth of real home prices and increase affordability.”