Fannie Mae’s latest monthly housing sentiment survey indicated, “It’s not a good time to buy.”

Fannie’s housing sentiment dropped a full 5% points in October when compared with September’s housing sentiment. This drop is the second lowest reading in the history of this survey

In addition, Fannie’s housing sentiment survey indicated that fewer consumers expect home prices to rise. This “not a good time to sell” feeds into the “not a good time to buy” sentiment and reflects consumer reticence concerning home ownership overall. That current sentiment translates into, “Is owning a home really a good investment?”

All of this is a complete turnaround in housing sentiment from last spring when consumer confidence was soaring, mortgage rates were still relatively low and the economy was on an all time tear. Now, home price gains have fallen below 6% annually for the first time in a year, according to the S&P CoreLogic Case Shiller Home Price Index, mortgage rates are rising and the economy’s tear isn’t touching everyone equally.

Doug Duncan, senior vice president and chief economist with Fannie Mae, said, “The survey’s findings of weak housing sentiment and overall economic optimism mirrors what we’re seeing in the broader economy. While economic growth has posted the fastest back-to-back pace in 4 years during Q3 2018, residential investment decline is happening for the third consecutive quarter, a first for this current expansion (cycle).”

Compounding declining housing sentiment are continuing rising mortgage interest rates, continually falling mortgage application volume (to the lowest levels in 4 years as rates hit an 8-year high), weakening affordability and declining inventories of entry-level homes for sale.

This currently declining inventory of entry-level homes makes complete sense. Rising rates translate into fewer homeowners wanting to list their properties. As Peter Boockvar, chief investment officer with the Bleakley Advisory Group, said, “Who wants to give up a mortgage with a 3 handle on it?”