Rising home prices along with a changing perception of the U.S. economy reduced consumer confidence in the housing market to the lowest point of 2018, according to Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index fell by 2.7 points in December to 83.7 from November’s 86.2. For the same month one year ago, the index was 85.8. The HPSI has been trending downward since May, when it set a record high of 92.3.
“Consumer attitudes regarding whether it’s a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release.
“Although home price growth slowed in 2018, the cumulative impact of sustained, robust increases in home prices outpacing income growth likely helped drive the share of consumers citing high home prices as a primary reason for a bad time to buy a home to a survey high. Meanwhile, consumers’ views on the direction of the economy, a key support for housing market sentiment of late, has softened somewhat from its October high.”
The net share of consumers that said now is a good time to sell a home rose one percentage point during December to 36%. But the net share of those that thought it was a good time to buy fell to 11% in December from 23% in November, with the raw percentage of those stating it was a bad time to buy rising to 41% in December from 34% in November.
Meanwhile, the net share of consumers that said their household income was significantly higher than one year ago fell five percentage points from November to 19%; this is up three percentage points over one year ago.
“Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability,” Duncan said.
The net share of those expecting home prices to rise fell by two percentage points from November and 13 percentage points from last December to 31%.