The Phaserl


Americans Suddenly Sour on the Housing Market

by Wolf Richter, Wolf Street:

It’s a Great Time to Sell and a Bad Time to Buy, they think.

Americans have been gung-ho in recent years about the housing market, bidding up prices with gusto as they went. The election helped. By February, the Fannie Mae Home Purchase Sentiment Index (HPSI) had shot up to 88.3, up 5.6 points year-over-year, and the highest ever in the data series going back to 2011. But since then, some dark clouds have appeared, and other dark clouds have been out there for a while – by some measures the darkest in the data series.

The index itself still looks benign: In May, it fell 0.5 points to 86.2, down 2.1 points from its February peak, but still up 0.9 points year-over-year:

But here are the clouds, according to Doug Duncan, senior VP and chief economist at Fannie Mae:

“High home prices have led many consumers to give us the first clear indication we’ve seen in the National Housing Survey’s seven-year history that they think it’s now a seller’s market.”

It’s seller’s market, suddenly.

But these people have a problem if they try to sell, according to Duncan: “Many potential sellers are unwilling or unable to put their homes on the market, perhaps due in part to concerns over finding an affordable replacement home.”

So they’re stuck because home prices have soared, and if they would like to sell to profit from the high prices, they might not because they can’t afford the high price and the mortgage payment of the home they’d have to buy. Welcome to the pleasures of Housing Bubble 2.

So a Bad Time to buy.

Fannie Mae’s survey, “the most detailed consumer attitudinal survey of its kind,” as it says, threw some very untoward data points into the mix:

Americans who say it is a bad time to buy surged 6 points from April to 33%, the highest ever in the data series.
Americans who say it is a good time to buy fell 2 points from April to 60%, tying for the lowest level in the data series.

But it’s a Great Time to sell.

Americans who say it is a good time to sell increased by 4 points to 61%, a new record in the survey high.
Americans who say it is a bad time to sell dropped to 29%, another new survey low.

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