Fannie’s Consumer Sentiment Index Rebounds in June

Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose by 3.2 points in June, recovering from the previous month’s dip and nearing its high for the year at 72.6. The increase reflects improved consumer confidence in the housing market, with notable rebounds in perceptions of buying and selling conditions. Nineteen percent of consumers now believe it’s an excellent time to buy a home, up from 14% in May, while those thinking it’s a wrong time to buy dropped from 86% to 81%. Similarly, those who think it’s a good time to sell rose from 64% to 66%, and those saying it’s a wrong time to sell decreased from 35% to 33%.

Despite these improvements, affordability remains a significant concern. More consumers expect home prices and mortgage rates to rise over the next year. While there is increased confidence in job security and household finances, the ongoing imbalance between supply and demand continues to dampen overall sentiment. Fannie Mae’s deputy chief economist, Mark Palim, emphasized that significant progress on affordability, through lower rates or increased supply, is needed to see a substantial improvement in housing sentiment.

ATTOM: Home Affordability Worsens in Q2

In Q2 2024, ATTOM’s U.S. Home Affordability Report revealed that median-priced homes and condos became less affordable in 99% of U.S. counties with sufficient data. Major expenses for owning a median-priced home, such as mortgage payments, insurance, and property taxes, now consume 35.1% of the average national wage—the highest since 2007. This marks a significant increase from both the previous quarter and the same period last year. The typical monthly homeownership cost was pegged at $2,114.

ATTOM’s CEO, Rob Barber, highlighted the challenges faced by homebuyers due to rising home prices and relatively high mortgage rates, making this spring buying season particularly tough. Out of 589 counties analyzed, 582 were found to be less affordable compared to historical averages. This trend worsened from Q1 to the same time last year. The data also showed mixed results regarding wage growth versus home price growth, with home prices outpacing wages in about half of the counties analyzed.

Housing Market Sees More Price Cuts Amid Growing Inventory

The housing market has seen a slow pace for several months, with inventory up 40% compared to last year. Despite this, some markets have defied national trends with tighter inventory and consistent demand. Rising mortgage rates, which started increasing in June 2023 and reached 8% by October, have impacted sales. As we move into the latter half of 2024, there’s hope that rates will stabilize, possibly encouraging buyers.

Inventory continues to rise, with 653,000 unsold single-family homes now available, up 1% for the week. New listings are also up 12% from last year, contributing to the growing inventory. However, pending home sales remain sluggish, with 8% fewer contracts than a year ago. Home prices have stabilized at around $455,000, with no significant annual appreciation. Price reductions are up, indicating weaker demand, but prices remain flat rather than falling. As mortgage rates remain high, the market’s future depends on rate declines and inventory adjustments.