Consumer sentiment dropped to its lowest level in two years in April, decreasing by 4.7 points to 68.5, as those surveyed relayed concerns about housing affordability and rising mortgage rates, according to the Fannie Mae Home Purchase Sentiment Index® (HPSI).
All six of the index’s components decreased month over month, with a survey-high 76% of consumers indicating that they believe it’s a bad time to buy a home, up from 73% last month, the report showed. Additionally, 73% of respondents expect mortgage rates to continue climbing over the next 12 months, also a survey high, according to the GSE. Year over year, the full index is down 10.5 points.
Consumer perception regarding the ease of getting a mortgage also decreased across nearly all surveyed segments this month, according to Doug Duncan, Fannie Mae senior vice president and chief economist. “This suggests that the benefit of the recent past’s historically low mortgage rate environment appears to have diminished, and affordability is poised to become an even greater constraint going forward,” Duncan said. “This sentiment is consistent with our forecast of decelerating home sales through the rest of 2022 and into 2023.”
The report also found that the percentage of respondents who say it is a good time to sell decreased from 74% to 72%, while the percentage who say it’s a bad time to sell remained unchanged at 21%, with the category netting out at a decreased 2 percentage points month over month.
The percentage of respondents who say home prices will go up in the next 12 months decreased from 48% to 44%, while the percentage who say home prices will go down increased from 20% to 25%. Those who think home prices will stay the same decreased from 28% to 26%, netting out at a 9 percentage points month over month category decrease, according to the data.