Real Estate Consumer Confidence Is The Lowest It's Been In A Decade

It’s no secret that various markets have been struggling throughout 2022. The idea of a looming recession has seen plenty of people hold onto their money more than before, and it’s having a host of knock-on effects. For one, people are cutting back on unnecessary purchases to keep up with things like bills and food.

Perhaps it’s little wonder that fewer people are buying and selling houses? Even if they are, it seems that many are worried about the state of the market and how this could impact their financial situation even more. Now, real estate consumer confidence is the lowest it’s been in a decade, but what does that mean?

What is consumer confidence?

Let’s start at the beginning. What is consumer confidence? This is an indicator of the optimism people feel regarding their own financial status and the state of their country’s economy. In short, the more confident someone feels, the more likely they are to have money to spend on things they don’t feel are overpriced. Of course, the same works the other way if they feel unconfident. 

Real estate consumer confidence is the lowest it’s been since 2011

Sadly, real estate consumer confidence is the lowest it’s been in a decade, as prospective sellers and buyers are more pessimistic than ever about the state of the market. This comes from a monthly survey released by Fannie Mae. It was revealed that 17% of people asked in July 2022 thought it was a good time to purchase a house compared to 20% the month before. The same survey revealed sellers are also less confident, with 67% thinking now is a good time to sell compared to 70% from June 2022.

Various components make up what makes people more confident

There are plenty of things that make up Fannie Mae’s survey, including worries about a change in income or job loss, mortgage rates, home price outlook, selling conditions, and buying conditions. Adding all of these components and their respective scores together revealed an index of 62.8 points in July 2022, down from two points the previous month. However, this is down 13 points from July 2021 and 93.7 back in the summer of 2019. 

Unfavorable mortgages are being largely blamed for the low real estate consumer confidence

So what is it that means real estate consumer confidence is the lowest it’s been in a decade? Many are blaming mortgage rates and how they don’t work in a buyer’s favor right now. To start, the average rate for 30-year fixed mortgages started at 3% in 2022 but rose to 6% in June. Although it’s fallen to the mid-5% range, it’s not been enough to entice people back to the housing market. To top things off, Fannie Mae’s survey revealed that 67% of people asked believe mortgage rates will rise even more. 

House sales have been falling despite more supply available

Real estate agents have noticed a trend in the last few months - and it’s not good. Sales have fallen sharply as people worry about inflation and finances. Having fewer buyers means that fewer houses are also being added to the market. Although more supply has arrived in the last few weeks, it’s still way off from what the market would typically see.

There is no telling what the future of the housing market could bring. Sadly, it seems that real estate consumer confidence doesn’t show any signs of improving for now. Hopefully, it won’t be long before the market can finally turn itself around once and for all.