With spring selling season underway, consumer confidence in housing is on the decline. After reaching a record high in February, Fannie Mae’s monthly Home Purchase Sentiment Index declined 3.8 percentage points in March, according to CNBC.
The number of respondents who think now is a good time to buy a home dropped 10 percentage points in February. The respective shares of respondents confident about job stability and income growth each fell by 8 percentage points. Meanwhile, the share of respondents who think now is a good time to sell rose by 9 percentage points.
The drop-off in sentiment stems from several factors, including climbing home prices and rising mortgage rates. Still, anticipation of rising rates could drive some buyers into the market sooner.
Despite housing recovery’s continued upward track, several challenges continue to keep that growth modest, if steady, including low inventory, particularly in the market-rate and affordable segments; rising prices; increasing mortgage rates; a still-unpredictable job market; and, in general, a wary public.
Though Fannie Mae's March report gives reason to pay attention, it’s not unlike the up-and-down behavior the Index has exhibited over the past several years. Though the Index has fluctuated, it continues its upward trend. In March 2016, the Index sat at 80.2, compared to 84.5 in March 2017.
While home purchase sentiment decreased in March, the National Association of Home Builders reported builder confidence reached its highest level since June 2005 during the month. Still, NAHB Chief Economist Robert Dietz cautioned in a statement that the industry continues to face headwinds from labor availability, material prices and mortgage rates.
Overall consumer confidence also increased in March, CNBC reported. The Conference Board’s Consumer Confidence Index, which measures consumer attitudes toward business conditions, reached 125.6 in March, a 9.5-point jump from February and the highest level since December 2000.
For more housing news, sign up for our daily residential construction newsletter.