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U.S. housing sentiment drops as home price outpaces income growth

2019-01-08 09:26

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Sellers and buyers in the U.S. housing market showed a weaker sentiment in December while home price outpaced income growth, the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, said on Monday.

The Home Purchase Sentiment Index (HPSI) dropped 2.7 points to 83.5 in November. Over the year, the HPSI dropped 2.3 points, said Fannie Mae.

"Consumer attitudes regarding whether it's a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low," said Doug Duncan, senior vice president and chief economist at Fannie Mae.

The net share of Americans who saw a good chance to buy a home dropped 12 percentage points to 11 percent in December, while those who thought a good time to sell edged up 1 percentage point to 36 percent, said Fannie Mae.

Meanwhile, the net share of survey respondents who expected home prices to rise dropped 2 percentage points to 31 percent.

"Although home price growth slowed in 2018, the cumulative impact of sustained, robust increases in home prices outpacing income growth likely helped drive the share of consumers citing high home prices as a primary reason for a bad time to buy a home to a survey high," Duncan said.

In the meantime, people who said their household income was significantly higher than a year ago fell 5 percentage points to 24 percent, according to Fannie Mae.

"Meanwhile, consumers' views on the direction of the economy, a key support for housing market sentiment of late, has softened somewhat from its October high," said Duncan.

"Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability," Duncan added.
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