Americans haven’t felt this bad about the housing market since 2011, according to a monthly survey.
The Fannie Mae Home Purchase Sentiment Index fell 2.0 points in July to 62.8%, its lowest in a decade, according to a Monday report. That print also reflects a level well below the all-time high it reached in 2019.
The decline was charged by higher borrowing costs as the Federal Reserve ramps up interest rates to ward off hot-inflation pervading through the US economy, while home affordability is still sky high, reports Business Insider.
A majority of those surveyed continue to express their lack of confidence in the housing market with only 17% of consumers saying it’s a good time to buy a home in the current economic environment.
“The HPSI has declined steadily for much of the year, as higher mortgage rates continue to take a toll on housing affordability,” said Doug Duncan, Fannie Mae senior vice president and chief economist in the report.
He added: “Unfavorable mortgage rates have been increasingly cited by consumers as a top reason behind the growing perception that it’s a bad time to buy, as well as sell, a home.”
Americans aren’t hopeful about home price growth, which has taken a hit over the past few months, according to the report. To that effect, the full index is down 13.0 points, year over year.
“With home price growth slowing, and projected to slow further, we believe consumer reaction to current housing conditions is likely to be increasingly mixed,” Duncan said.
The latest data reflects further damage to the housing market after it headed for its worst contraction since 2006 in June. It entered its worst period of decline as mortgage applications cratered at a 52% annualized rate compared with the previous three months.
The outlook for the US economy looks bleak as the Fed’s aggressive monetary policy has investors worried about the risk of a recession in the next year.