Consumers are more optimistic about home buying and selling conditions despite a struggling COVID economy, according to Fannie Mae’s June National Housing Survey.
The Fannie Mae Home Purchase Sentiment Index (HPSI) increased nine points totaling 76.5 in June, with four of its six components increasing month over month, according to the lender. The HPSI is down fifteen points from last year, however.
April saw nearly the lowest consumer sentiment in the housing market ever at 63, but the June survey showed promise, especially from a critical demographic: renters.
“The share of renters who say it’s a good time to buy a home is now at its highest level in five years, suggesting favorable conditions for first-time homebuying, consistent with the recent rebound in home purchase activity,” said Doug Duncan, Fannie Mae senior vice president and chief economist.
On the other side, Duncan says that homeowners see the bounce back as an excellent opportunity to sell a home, but that the uncertainty around the pandemic leaves a potentially long road to recovery.
Home sales spiked in May, and new listings continue to roll in, with some states beginning phased reopening plans. Year over year, the inventory of homes for sale is 19 percent lower than last year.
In June, 61 percent of respondents to the Fannie May survey said it is a good time to buy, while 27 percent believe it is a bad time to buy a home.
Still, of the 1,007 respondents, 34 percent believe home prices will rise in the coming months, but that could also reduce affordability, according to CNBC.
“As lockdown restrictions begin to ease across the country, we expect economic recovery to be largely shaped by consumers’ decisions regarding when and how to reengage in the economy,” Duncan said.
Some analysts predicted an increase in consumer sentiment in late June before the survey was released, after some promising signs within the housing market.
“The jump in new home sales is a nice indicator of what’s to come because it’s based on contract signings, a somewhat early stage of the homebuying process,” said Danielle Hale, chief economist at Realtor.com. “A similar surge in next week’s pending home sales, which cover the much larger existing homes market, will be good confirmation that the low point in home sales is likely behind us.”
Job security remains an important factor for consumers, especially with high unemployment numbers lingering. Slightly more respondents report being concerned about losing their job compared to May, but a substantial 74 percent say that they are not concerned.
However, most respondents feel that the economy as a whole is on the wrong track at 57 percent, so whether the uptick in consumer confidence is a predictor of things to come remains to be seen.