Sentiment towards homebuying by US consumers declined for the third consecutive month, reaching its lowest level since March of this year. The decline in sentiment is possibly the result of consumer uncertainty over jobs and income, according to a new survey from the government backed lender Fannie Mae.
The lender’s Home Purchase Sentiment Index (HPSI) is a survey of 1,000 Americans designed to gauge their feelings about buying and renting a home, home sale and rental price changes, the national economy and general consumer sentiment. The information is then distilled into a number and tracked monthly.
Overall, consumer sentiment decreased by 1.1 percentage points to 81.7 in October, says Fannie Mae’s HPSI reading. October’s number was also 1.5 percentage points lower than October 2015.
However, more Americans felt it was a favorable time to buy a home in October, with consumer sentiment rising by 2 percentage points to 31 percent. However, sentiment remains at an all-time survey low, according to Fannie Mae.
Meanwhile, the percentage of Americans surveyed who felt now was a good time sell increased 4 percentage points to 19 percent in October — just 1 point away from the all-time survey high recorded back in July.
There were many factors that influenced consumer sentiment including mortgage rate increases, the potential for price gains to slow and a drop-off in income potential, said Fannie Mae Chief Economist Doug Duncan.
“Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate. Consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index,” Duncan added.
However, this component of the HPSI changes drastically from month to month. The “firming trend in wage gains from the October jobs report, may foreshadow an improving view in the near future.”
You can view the entire survey here.