After Record High, Consumer Confidence Falls

Consumer confidence in the housing market receded from its record high in February, dropping 3.8 percentage points to a reading of 84.5 in March, according to Fannie Mae’s Home Purchase Sentiment Index, a survey of about 1,000 Americans. Five of the six components measured in the index saw a decline, including the percentage of consumers who expressed a positive outlook on buying a home and their employment situation. However, the percentage of consumers who said now is a good time to sell surged 9 percentage points month over month.

“Strong home-price appreciation has turned into a double-edged sword for the housing market, as it boosted the net share of consumers saying it’s a good time to sell to a record high, surpassing the plunging ‘good time to buy’ indicator for the first time in history of the survey,” says Fannie Mae chief economist Doug Duncan. He points out that the housing market could see some “tailwinds from a seasonal rise in for-sale inventory, particularly as some sellers seek to lock in profits from recent rapid home-price gains. The market could also get a boost from home buyers who decide to jump into the market before [mortgage] rates rise further.”

Here are some additional highlights from Fannie Mae’s Home Purchase Sentiment Index for March:

30 percent: The net share of Americans who say now is a good time to buy a home, down 10 percentage points from February.
31 percent: The net percentage of those who say it’s a good time to sell, up 9 percentage points from February and the second consecutive month for setting a survey high.
39 percent: The percentage of consumers who say now is a bad time to buy due to high home prices.
24 percent: The percentage of consumers who say now is a good time to sell due to high home prices.
44 percent: The net share of consumers who believe home prices will rise, which is down 1 percentage point from February.
70 percent: The net share of Americans who say they are not concerned about losing their job, which is down 8 percentage points.
11 percent: The net share of consumers who say their household income is significantly higher than it was 12 months ago, down 8 percentage points.