Confidence in the housing market hits a new low for consumers

Nov. 7 (UPI) -- Consumers are skeptical about the near future of the housing market, a new report from Fannie Mae says.

Fannie Mae, or the Federal National Mortgage Association, released its Home Purchase Sentiment Index Monday, noting a decline in consumer confidence for the eighth straight month. The index dropped 4.1 points in October, reaching 56.7, making it the lowest score since the report started in 2011.

The decline in confidence is not wholly unexpected, said Doug Duncan, Fannie Mae senior vice president and chief economist.

"The HPSI reached an all-time survey low this month, in line with expectations that the housing market will continue to cool in the months ahead," Duncan said. "Consumers are increasingly pessimistic about both homebuying and home-selling conditions."

Of the six factors in the index, five showed declines. The rate of respondents who answered that now is a good time to buy a home decreased to 16% from 19% in September. Meanwhile responses saying it is a bad time to buy increased to 80% from 75%.

Confidence in the selling market is notably more favorable yet still trending downward. The percentage of responses saying now is a bad time to sell increased to 42% from 33%.

As for the year to come, respondents are not optimistic about homes maintaining their current value. Thirty percent said home prices will go up in the next 12 months, down from 32% the month prior.

There are compounding factors leading to the pessimism about the housing market. Mortgage rates have doubled since January, reaching a 20-year high of 7.08% in October, Forbes reported.

Home prices also inflated sharply, continuing a trend that started during the COVID-19 pandemic. The median sales price of houses sold in the United States exceeded $440,000 early this year, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

"As continued affordability constraints reduce homebuyer demand, and homeowners become reluctant to sell at potentially reduced prices, we expect home sales to slow even further in the coming months, consistent with our forecast," Duncan said.