Optimism among home sellers continues to climb while buyers are pulling back, according to the latest Fannie Mae Home Purchase Sentiment Index, which dipped 0.5 percentage points in May to a score of 86.2. It is 0.9 percentage points ahead of the year-ago mark.
The net share of Americans who say now is a good time to buy a home fell 8 percentage points to 27%, a survey low. Meanwhile, the net share who say now is a good time to sell edged up 6 percentage points to 32%, a survey high.
Only one other time since the survey began in 1996 has the net share of those reporting that it is a good time to sell exceeded the share of those saying it’s a good time to buy.
Although today's housing market favors sellers, many have been reluctant to list their properties for fear of not being able to secure a replacement in time. Others are listing their homes at lower prices than they could likely fetch in an effort to speed up the sales process or because the current price-growth climate makes forecasting difficult.
The trend is likely to continue so long as inventory conditions remain tight. Meanwhile, a cooldown in rent-price growth is encouraging some would-be entry-level buyers to keep renting for the near-term, according to the latest Beracha, Hardin & Johnson Buy vs. Rent Index from Florida Atlantic University and Florida International University. That should ease demand for single-family homes and help slow home-price appreciation.
A drop this week in mortgage interest rates could propel buyer confidence back on its upward track in the month of June, spurring more for-sale housing demand. Mortgage applications surged 7.1% last week after rates reached their lowest levels since November, CNBC reported. Loan applications were up 10% from the week prior.
Still, builder confidence is growing, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. According to the index, sales expectations for the next six months and current sales conditions both inched up in May as a bevy of demand awaits builders, who continue to grapple with headwinds including rising material prices and a drought in the worker pipeline.