Income Growth Key To Housing Sentiment
Fannie Mae’s Home Purchase Sentiment Index looks at consumers’ attitudes toward buying and selling a home, mortgage rates, household income, prices, employment and more in an effort to measure Americans’ feelings about the residential real estate market. According to the most recent release, housing optimism slipped slightly in January, falling 1.7 points from the month before. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says income growth isn’t keeping up with home price increases and it’s causing affordability concerns among potential buyers. “Housing affordability is being constrained because the pace of growth in real income has not kept up with gains in real home prices as demand has grown faster than supply,” Duncan said. “On the bright side, consumers have been increasingly positive about their ability to get a mortgage, suggesting that credit tightness is not the main issue limiting housing market activity today, a feeling that we also see conveyed by lenders in our Mortgage Lender Sentiment Survey.” Duncan expects that consumers’ attitudes toward buying a house will likely remain flat until income growth picks up or there is an increase in the number of lower-priced homes available for sale. More here.