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In March the Fannie Mae Home Purchase Sentiment Index dropped by 3.5 points to 68.1, its lowest level in over a year. Most of the housing-specific components held pretty steady. For example, the share of respondents who believe that now is a good time to buy a home fell 2 percentage points to 22% and the share of respondents who believe that now is a good time to sell a home increased 2 percentage points to 64%, both well within the range of responses over the last year. The real shock from the March survey came from the responses to the question of whether they were concerned about losing their job in the next 12 months. 32% of respondents said they were concerned about losing their job, up 9 percentage points from last month and reaching a new survey high. This spike in employment fear is primarily what dragged the overall index down, as the responses to questions about home value and mortgage rates were basically in line where they had been for several months.
Employment conditions, as well as perceptions about them, are key inputs to the health of the housing market. If prospective homebuyers start to worry about staying employed, they become less likely to want to take on any larger housing payment and very quickly they will not be prospective homebuyers anymore. What is even more concerning is that these responses were collected in March, prior to the tariff announcement and subsequent stock market plunge in the last week. The rapid growth of economic uncertainty in recent days will most likely make it the case that March’s survey results, which show serious fears among consumers about losing their jobs, are the start of a trend rather than an outlier. Interestingly, the share of respondents who said that the economy was on the right track in March increased from February, from 31% to 34%, while the share who said that the economy was on the wrong track fell, from 68% to 66%. Respondents seemed acutely aware of their own economic anxiety in March, but less so of the broader challenges around them. We strongly expect the trend of the “right track/wrong track” question to flip in April absent a major tariff reversal from the White House.
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