A whopping 86% of prospective buyers last month said it was a bad time to buy, versus 14% who said it was a good time, according to Fannie's Home Purchase Sentiment Index. The figures released Friday are both record lows for the National Housing Survey since the questionnaire began in 2010.

"Current sentiment reflects pent-up frustration with the overall lack of purchase affordability," said Doug Duncan, senior vice president and chief economist at Fannie, in a press release. 

The bad mood comes at the same time experts predict home prices to rise at a faster pace through the rest of the year. Mortgage rates meanwhile continue teetering around 7% and the market is closely watching inflation metrics ahead of an anticipated interest rate cut by the Federal Reserve in September. 

Consumers agree with economists, as 42% of those surveyed by Fannie expect home prices to rise in the next 12 months, and 31% assume mortgage rates will increase over the same period.  Compared to last May, 10% fewer respondents last month believed home prices will decline. 

Conversely, 64% of homeowners say it's a good time to sell versus 35% who suggest staying put. Overall, the government-sponsored enterprise's HPSI fell 2.5 points to 69.4 in May, approaching lows hit at the onset of the pandemic in 2020 and the steep rate climb in late 2022.

More respondents month-over-month meanwhile said their household income was significantly higher in the past year, from 17% to 20%. Three of every four consumers meanwhile said they weren't concerned about losing their job, a number that's stayed relatively flat both monthly and yearly. 

Their confidence bodes well against larger assessments of a cooling labor market and slowing consumption. Auto loan and credit card delinquencies also rose in the first quarter, according to the Federal Reserve Bank of New York. 

Duncan, speaking with National Mortgage News editors and reporters this week, said rising consumer debt wasn't surprising, with more auto loan troubles in dealer credit rather than bank credit, and credit card interest rates at lofty levels. Consumers with more delinquencies are less likely homeowners, he suggested. 

"Mortgage is what's holding things down in terms of total debt service because so many people refinanced to very low interest rates," he said. "People who have mortgages are actually in a much better position because of the low rates on those mortgages."