Consumer confidence in the housing market held near its all-time low last month with most in a new survey saying it is not a good time to buy a home.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose modestly month-over-month in March while remaining close to its lowest point reached late last year. Seventy-nine percent of those surveyed said it is a bad time to buy amid persistently high prices and mortgage rates.
The HPSI reached a historic low in October with a reading of 56.7 while the reading from March shows a monthly increase to 61.3.
The full index, which measures confidence in the housing market and the economy, is down by close to 12 percent year-over-year.
"Despite the recent banking turbulence, the HPSI increased modestly in March, although it still remains near its historical low," Mark Palim, Fannie Mae vice president and deputy chief economist, said in a news release. "With the spring homebuying season now upon us, a large majority of consumers continue to believe that it's a bad time to buy a home.”
“Homeowners sharing this belief frequently cited 'unfavorable mortgage rates' as the primary reason for their pessimism, further corroborating the often-discussed disincentive – or 'lock-in effect' – that many mortgage holders who may be considering moving have toward giving up their lower rate,” Palim added.
The percentage of respondents who expect mortgage rates to decrease in the next 12 months fell by 3 points to 12 percent.
Yet a lack of new home listings weakened mortgage demand last week even as the benchmark home loan rate continued its downward trajectory, data from the Mortgage Bankers Association (MBA) shows. The Mortgage Composite Index, which measures the volume of mortgage applications, decreased by 4.1 percent from a week before.
The benchmark mortgage rate has fallen for four consecutive weeks averaging 6.28 percent as of April 6, according to data released yesterday by Freddie Mac.
Consumers surveyed also expressed concern about home prices, Fannie Mae’s Palim said, noting an “even split” between those who expect prices to rise and those who expect them to fall.
“With affordability constraints, the lock-in effect, and home price direction uncertainty weighing heavily on consumers' minds, we maintain our forecast that total home sales for the year will remain subdued,” Palim concluded.
