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Home purchase sentiment dips in June.

Fannie Mae, Washington, D.C., found that consumers were a little less positive about the housing market and prospects for income growth in June than they were in May, according to Fannie Mae's Home Purchase Sentiment Index[TM].

May's index hit an all-time survey high at 85.3, but June saw the measure slip to 83.2. Some components of the index remained strong. For example, the share or respondents saying it was a good time to sell increased 5 percentage points to reach a survey high at 18 percent.

After declining for three straight months, those saying it was a good time to buy rose 3 percentage points to 32 percent.

The share of consumers who expect home prices to go up over the next 12 months dropped 9 percentage points on net to 33 percent.

Sentiment on the overall economy weakened noticeably. The number of consumers reporting that their household income was significantly higher than it was a year ago dropped by 10 percentage points to just 8 percent in June.

In the latest survey, a higher number (59 percent) said they think the economy is on the wrong track. Plus, the net share saying they are not worried about losing their job fell by 4 percentage points to 68 percent.

Doug Duncan, senior vice president and chief economist at Fannie Mae, said, "Pending home sales have pulled back in the face of continued home-price growth, and we're seeing some softening in the higher-priced components of the market. Growing pessimism about the overall direction of the economy gives us further pause as it now stands at the highest level we've seen in our National Housing Survey in the last two years."

Duncan said prospects for the housing market's ongoing recovery will hinge increasingly on income-growth expectations. He said, "Meaningful improvement in the housing market going forward will likely require consistent upward movement in consumers' income-growth perceptions, which have thus far been stagnant."

Duncan added that the inventory shortage of lower-priced homes will continue to play a role in the performance of the housing market. The shortages are contributing to price hikes and bidding wars on the limited supply in certain markets.

Duncan put it this way: "Also helpful would be an acceleration of supply accumulation of entry-level homes, which would moderate the growth of real home prices and increase affordability."

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Title Annotation:NEWS ROOM
Comment:Home purchase sentiment dips in June.(NEWS ROOM)
Publication:Mortgage Banking
Date:Aug 1, 2016
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