Consumers are surprisingly optimistic about the current housing environment, despite tight market conditions in most U.S. cities. Fannie Mae’s monthly sentiment index jumped to a record high as a strong economy and rising home prices buoyed consumer confidence for the month.
Buyer sentiment was the only component in the index that fell, which is unsurprising given the lack of housing inventory alongside rising prices and mortgage rates. Consumers were remarkably optimistic in the other five components of the index, causing housing confidence to reach its highest level on record in April.
- Consumer confidence in the housing market hit its highest level on record in Fannie Mae’s monthly sentiment index
- The index showed the most growth in consumers who said now is a good time to sell and those who think prices will continue to rise
- Resilient consumer attitude has done little to help the housing supply, while high prices and rising mortgage rates eat away at affordability
Consumer confidence in housing jumped to its highest level on record in April, according to a monthly sentiment index from Fannie Mae.
Of the index’s six components, only the share of those who think it’s a good time to buy fell. No surprise there, given the high competition in most of the nation’s neighborhoods. The share of those who think it’s a good time to sell and those who think prices will continue to rise jumped the most. In addition, more consumers think their incomes will rise over the next year, and fewer think they will lose their jobs.
Consumer attitudes remain resilient going into the spring/summer home buying season,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, the upward trend in the good-time-to-sell share seen since last spring has done little to release more for-sale inventory. The tightest supply in decades, combined with rising mortgage rates from historically low levels, will likely remain a hurdle for mobility and a persistent headwind for home sales.”
While more Americans are less concerned about losing their jobs, just 18 percent said their household income is significantly higher than it was a year ago, according to the Fannie Mae survey. While that is a slight gain compared with March, it doesn’t exactly mean potential buyers are swimming in cash. Home prices are rising far faster than incomes.
View the original article at CNBC