Consumer Housing Sentiment Slips

The U.S. housing market may be starting to get volatile. Fannie Mae’s latest Home Purchase Sentiment Index report found that consumer confidence in housing took a hit in February. The worry seems to be stemming from some general upheaval at the federal financial level.

“Volatility in consumer housing sentiment continued into February, with the new tax law beginning to impact respondents’ take-home pay and the stock market creating negative headlines due to early-month turbulence,” said Doug Duncan, SVP and Chief Economist at Fannie Mae. “Additionally, consumers’ expectations for higher mortgage rates suggest that consumers expect the Fed to hike rates a few more times in 2018.”

In raw numbers, Americans’ feelings about the housing economy translated into a nearly 4 percent drop in confidence in February.  The net share of respondents to Fannie’s survey who said now is a good time to buy a home decreased 5 percent (to 22 percent) from January, while those who said it’s a good time to sell dropped 2 percent (to 36 percent).

The number who said home prices will go up in the next 12 months decreased to 45 percent overall in February. That’s a 7 percent drop that mirrors the number of consumers who said mortgage rates will go down over the next 12 months.

“Americans expressed a weakened sense of job security, with the net share who say they are not concerned about losing their job decreasing 2 percentage points,” the report stated. “Finally, the net share reporting that their income is significantly higher than it was 12 months ago increased 1 percentage point.”

The number of respondents who said they are not concerned about losing their job fell 2 percent, to 71 percent. However, wages are up, if only barely. The number of those who told Fannie Mae that their household income is significantly higher than it was 12 months ago rose 1 percent, to 17 percent, while those reporting a significant decrease in their income compared to a year ago dropped by 2 percent, to 9 percent overall.

That last number matches a survey low last seen in February 2017.

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