Fannie Mae reports that consumer sentiment toward housing is at the lowest level in a decade. The Fannie Mae Home Purchase Sentiment Index dell 2.0 points in July to 62.8, its lowest level since 2011 and well below the all-time high set in 2019. Surveyed consumers continue to express pessimism about homebuying conditions, with only 17% of respondents reporting it’s a good time to buy a home. Meanwhile, the percentage of consumers believing it’s a good time to sell has begun ticking downward in recent months, falling from 76% in May to 67% in July.
Lower home prices, declining mortgage rates and more homes available on the market have increased demand for housing in July. Redfin reports that its Homebuyer Demand Index, a measure of requests for home tours and other home-buying services, increased seven points during the last week of July, and mortgage purchase applications were up for the first time in five weeks. "Homebuyers may catch a break this month as rates have come down nearly a point from the recent high on fears of a recession," said Redfin Deputy Chief Economist Taylor Marr. “There are deals to be had on some homes that have been sitting on the market with reduced prices. General economic uncertainty may continue to keep a lid on homebuyer demand and keep mortgage rates volatile, but the labor market remains a beacon of strength in the economy and the housing market in particular."
The closely watched inflation reading Consumer Price Index (CPI) will be released on Wednesday and the Producer Price Index for July on Thursday and will be closely watched for signs of improvement or even higher numbers. CPI is currently running at a 41-year high of 9.1% as prices for goods and services have surged over the past 12 months. The CPI is a measure of the average change over time in the prices paid by consumers for consumer goods and services.