Fannie Mae said the surge in COVID-19 transmission and deaths hurt consumer confidence in the housing market in December.
The Home Purchase Sentiment Index fell for the second consecutive month from 80 in November to 74 and from last year to 91.7. This is the lowest level of the index since May 2020.
Selling sentiment was hardest hit, falling by a net 18 percentage points in December compared to the previous month. The optimism of the salespeople decreased from 59% to 50%, while the proportion of "bad sales times" increased from 33% to 42%. Consumer attitudes towards buying fell by nine percentage points from November. The proportion of “good buying time” decreased from 57% to 52%, while the negative proportion rose from 35% to 39%.
About 39% of borrowers expect mortgage rates to be held for the next 12 months, while unchanged stocks expect 43% to grow and 8% to decline further.
"Both the 'good time to sell' and the 'good time to buy' components declined significantly, with respondents mostly noticing adverse economic conditions," said Doug Duncan, senior vice president and chief economist, Fannie Mae in one Press release.
“The sell-side component in particular fell by 18 points for the first time since April. This reversed most of the gains in the past three months and implied us that potential home sellers could, at least temporarily, wait to list their homes. In that case, this could help maintain already tight inventory levels and support additional (albeit less) growth in property prices, which could further slow down property sales. "
Employment worries were equally high in December. Those who were not worried about losing their jobs fell from 76% to 75%, while those actively affected fell from 24% to 25%. The net share of households with a significantly higher income in the past 12 months fell from 24% in November to 20%, while a share of 18% had a significantly lower income.