Call it a "reverse trifecta."
Americans are making less money, are concerned about interest rate hikes and view home purchases as more expensive going into the last two months of 2016. All three factors don't bode well for the U.S. real estate market in 2017, according to one industry source.
Data from the most recent Fannie Mae Home Purchase Sentiment Index show confidence in the residential home market fell by 1.1 points in October - the third consecutive monthly decline in a row. Fannie Mae gives three significant reasons for the slide in homebuyer confidence. This from the report:
- The share of consumers reporting significantly higher income over the past year experienced the largest drop, decreasing eight percentage points.
- The net share of consumers expecting home prices to go up in the next year fell three percentage points.
- Those who expect mortgage rates to drop and those who are confident about not losing their job each dropped by one percentage point in October.
It's a witches brew of bad news for consumers, who should be driving the real estate market upward, but apparently feel weaker confidence in doing so.
"The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today."
Duncan says that, since July, more consumers have "steadily expected mortgage rates to rise and home price appreciation to moderate."