Fannie Mae’s Home Purchase Sentiment Index dropped to the lowest level since May due to consumers’ increasingly pessimistic view on the housing market. Realtor.com says the drop in consumer confidence can be attributed to the pandemic’s rising cases in recent weeks and the continued fear of unemployment. From November to December, the index dropped six points overall with the share of Americans believing it is a good time to buy dropping five points. Now 52% of Americans believe it is a good time to buy and 39% say it is a bad time to buy. The largest drop though comes from sellers who believe it is a good time to sell, going from 59% in November to just 50% in December.
It’s the first time this measure has fallen since April, and the decline was large enough to erase the gains made in recent months.
The change implies “that, at least temporarily, potential home sellers might wait to list their homes,” Doug Duncan, Fannie Mae’s chief economist, said in the report.
“If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales,” Duncan added.
A separate report on Thursday from Realtor.com found that the number of homes for sale had dropped below 700,000 for the first time since the company began tracking this data.