US home purchase sentiment edges up in August - Fannie Mae

[WASHINGTON] US consumer sentiment about buying a home ticked up in August as expectations about falling mortgage rates offset reduced optimism about home price appreciation and the timing to buy and sell a home, Fannie Mae said on Monday.

The largest US home finance agency said its index on home purchase sentiment moved up 0.1 percentage point to 93.8 last month, the highest level since this measure began.

Mortgage rates have fallen to their lowest levels since the autumn of 2016 in step with lower US bond yields because of anxiety about a softening global economy and trade tensions between China and the United States.

"Unfortunately, much of the lower interest rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy," Fannie Mae chief economist Doug Duncan said in a statement.

A telling sign was a decline of the net share of the 1,000 consumers surveyed who said they are not worried about losing their job. It fell 4 points to 77 per cent last month.

Last Friday, the Labour Department said nonfarm payrolls grew by 130,000 in August, fewer than the 148,000 forecast among analysts polled by Reuters. Job growth has slowed since mid-2018.

Meanwhile, the gap between those who say mortgage rates will decline over the next 12 months and those who see them rising shrank to 17 per cent in August, the smallest level seen in the history of the survey.

The component on mortgage rates was the only one of six that improved from the month before.

For example, the net share of respondents who said it was a good time to buy a home dipped 1 point to 25 per cent, while the net share who said it was good time to sell a home fell 4 points to 40 per cent, Fannie Mae said.

While consumers' mood to buy and sell a home weakened a bit, the housing sector will likely be supported by cheaper borrowing costs, Duncan said.

"We do expect housing market activity to remain relatively stable, and the favorable rate environment should continue supporting increased refinance activity," he said.

REUTERS