The Fannie Mae Home Purchase Sentiment Index (HPSI) remained relatively flat in May, decreasing by only 0.3 points but inching nearer its 10-year- and pandemic-low of 63.0 from April 2020. Surveyed consumers continue to express concerns about housing affordability, with the "Good Time to Buy" indicator reaching a new survey low, as 79% of respondents reported that it's a bad time to buy a home. Additionally, 70% of respondents expect mortgage rates to continue their recent ascent over the next 12 months. A greater share of consumers also expressed concern that they may lose their job in the next 12 months, but that component remains firmly positive generally, with only 16% of consumers expressing pessimism. Year over year, the full index is down 11.8 points.

"Consumers' expectations that their personal financial situations will worsen over the next year reached an all-time high in the May survey, and they expressed greater concern about job security," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Further, respondents' pessimism regarding homebuying conditions carried forward into May, with the percentage of respondents reporting it's a bad time to buy a home hitting a new survey high. The share reporting that it's 'easy to get a mortgage' also decreased across almost all segments."

Duncan continued: "These results suggest to us that increased mortgage rates, high home prices, and inflation will likely continue to squeeze would-be homebuyers – as well as those potential sellers with lower, locked-in mortgage rates – out of the market, supporting our forecast that home sales will slow meaningfully through the rest of this year and into next."