WASHINGTON—With more Americans reporting lower income prospects, Fannie Mae’s Home Purchase Sentiment Index declined to 80.8 from 83.2 in the most recent survey, even as there was a slight uptick in sentiment around whether it’s time to buy a home.
“The challenge of housing affordability coupled with tight supply may be preventing overall housing sentiment from gaining momentum as income growth isn’t keeping pace with the cost of housing,” Fannie Mae said.
Fannie Mae said consumers’ net attitudes about the direction of their household income relative to a year ago fell five points during the month, setting this HPSI component back to just below its March 2015 level. The HPSI Good Time to Sell component fell six points on net this month while Good Time to Buy was the only component to improve, increasing one point on net, Fannie Mae reported.
“The latest reading of the Home Purchase Sentiment Index remains near the survey’s high witnessed in June, exemplifying the theme we laid out at the beginning of the year: the economy drags housing upward,” said Doug Duncan, senior vice president and chief economist at Fannie Mae in a statement. “While aggregate income growth has gradually picked up with a continually improving labor market, consumers’ assessment of their income over the past year has not yet shown sustained improvement, partially weighing on overall sentiment. This year’s housing market is poised to be the best since 2007; however, consumers’ ability and willingness to purchase a home is likely to remain an issue in many regions going forward until we see consumer confidence in their income growth consistently gain traction.”