Mortgage

Housing market pessimism grew in September

Amid a record spike in home prices, the Fannie Mae Home Purchase Sentiment Index continued its downward trend in September.

The total HPSI declined to 74.5 from 75.7 in August and 81 in September 2020. The percentage of consumers who thought it was a good time to buy a home decreased from 32% in August to 28% and compared to the previous year to 54%. It was also the all-time low in the July poll.

While “exhausting” home price growth rates keep setting new records, only 13% net of borrowers expect them to rise next year, up from 16% m / m and 24% year-over-year. Consumers may be betting that the appreciation will hit a tipping point, but they could be wrong, according to Fannie Mae chief economist and SVP Doug Duncan.

"We believe other real estate market fundamentals continue to support further home price appreciation – including low inventory levels and low interest rates," Duncan said in the report.

Freddie Mac's average 30-year fixed-rate mortgage fell 2.99% in the week ended October 7. Net 43% projected rising mortgage rates for the next year, up from 47% in August and 27% a year ago.

Active offers peaked in September 2021 but were still 22.2% below 2020 levels according to the latest data from Realtor.com.

According to a separate report by HouseCanary, the volume of new listings declined 10% annually in September, affecting the lower end of the market the most. Single family home new entries declined 27.1% year over year in the $ 0 to $ 200,000 price range and 18.6% between $ 200,000 and $ 400,000. Meanwhile, they grew 0.7% from $ 400,000 to $ 600,000 and grew 3.1% between $ 600,000 and $ 1 million.

"We continue to see potential buyers making above list price offers on home prices given the extremely competitive marketplace," said Jeremy Sicklick, Co-Founder and CEO of HouseCanary. "If the supply shortage persists through the winter, we could expect further rapid price growth in spring 2022, but at a lower rate than 2021."

On the other hand, sellers were pleased with Fannie Mae's Home Purchase Sentiment Index. Due to the limited supply and price hikes, 74% of HPSI respondents believed September was a good time to sell a home, up from 73% in August and 56% in September 2020.

The net share of consumers not worried about losing their jobs fell to 65% from 67% in August and the year before. A net income of 14% reported a significantly higher household income last year, which held up on a monthly basis and doubled from 7% annually.

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