Don't buy a house.
That's what a record share of Americans still thought about the housing market in August, with 82% saying it's a bad time to purchase a home, matching the all-time high hit the prior month. Only 18% said it was a good time to buy, also sustaining the low reached in July, according to Fannie Mae’s gauge of housing sentiment released Thursday.
The reason is simple: high prices and high mortgage rates.
"It's not surprising," Doug Duncan, Fannie Mae's chief economist, told Yahoo Finance after release of the results. Buyers are "so frustrated with the process that there was no real change in their attitude" from last month.
The August survey found that 41% of respondents expect prices to go up over the next 12 months, unchanged from July. And 80% expect mortgage rates will stay the same or go up over the same period.
The average rate on the 30-year fixed mortgage clocked in above 7% for four straight weeks in August, something that hasn't happened for 21 years.
That's cut out many budget-conscious buyers from the market and dissuaded plenty of homeowners from listing or risking losing their ultra-low mortgage rate. Per Fannie Mae, 34% of survey respondents said it was a bad time to sell.
"If you are a current owner, you're actually in a pretty good spot because you've probably locked in a very low interest rate, you've seen a lot of price appreciation, and you probably have a lot of equity in your home, it's not a bad place to be," Duncan said.
"But if you had to go sell and buy and come out from under that very low mortgage rate and pay the new higher home price, you'd be giving away a lot of that equity to make a move. It's part of the reason people are simply not moving much," he added.
Despite the glum outlook on housing, Fannie Mae's full index is up 4.9 points from the previous year, largely because folks still feel pretty optimistic about their financial situation.
For instance, 78% of respondents said they are not concerned about losing their job in the next 12 months and the net share of people who said their household income is significantly higher than a year ago increased 1 percentage point from July.
But that confidence isn't bleeding into the housing market, which is an unusual disconnect.
"If people are more worried about their job, they pull back a little bit. They might not be as aggressive in bidding on a house, or they might not go out shopping. And that would be consistent with a weaker housing market," Mark Palim, deputy chief economist for Fannie Mae, told Yahoo Finance.
But "what's happened for the moment is that it's the supply factors that are really driving the market. It's the absence of homes available for sale."
The share of homes listed for sale is down 18% over the same period last year, marking the biggest drop since the start of 2022, according to Redfin’s August market update. Buyers searching for a home still have fewer options in the resale market, resulting in the lowest sales pace for previously owned homes for July since 2010, the National Association of Realtors reported.
The lack of homes for sale has helped to drive home prices higher. The S&P Case-Shiller national home price index climbed by nearly 1% in June and is now within a hair of its peak a year ago.
Buyers who are still left in the market have been turning to new construction for more choices. Sales of newly built homes increased 4.4% in July from June, and builders ramped up construction that month to meet demand.
"Builders have to keep building," Duncan said. "That's where supply is gonna come from in the short run."
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.
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