Home buyers are getting more frustrated with the rising prices and lack of options in the housing market.

Fannie Mae’s latest Home Purchase Sentiment Index reveals that just 35% of people believe now is a good time to buy a home, down from 47% just a month ago. Moreover, the percentage of people who think it’s a bad time to be in the market for a home surged to 56%, up from 48% last month.

Dough Duncan, senior vice president and chief economist at Fannie Mae, told HousingWire that consumers are acutely aware of the higher prices and reduced supply of homes for sale. Those were “the two reasons cited most frequently” for home buyer’s sentiments, he said.

“However, despite the challenging buying conditions, consumers do appear more intent to purchase on their next move, a preference that may be supported by the expectation of continued low mortgage rates, as well as the elevated savings rate during the pandemic, which may have allowed many to afford a down payment,” Duncan said.

Despite the low inventory, bidding wars and high prices all taking their toll on home buyer sentiment, factors such as the rebounding economy and more stable income levels have pushed up the overall HSPI index by on point, to 80, Fannie Mae said.

Four of the HPSI’s six components that measure market expectations actually increased in May compared to the month before. So the HPSI is still 12.5 points higher than it was in May 2020, when forbearance and unemployment concerns weighed down consumer sentiment.

Of course, from a seller’s perspective, there’s every reason to be pleased. Just over two thirds of respondents in Fannie Mae’s monthly survey said now is a prime time to list a home for sale, unchanged from a month ago.

Survey respondents were almost unchanged on how much they think homes will cost too. Some 47% said the believe home prices will rise in the next 12 months, down from 49% in April, while 17% said they believe home prices will go down in the next year, the same as one month ago. Twenty-nine percent said they believe home prices won’t change, up from 27% one month prior.

Prospective buyers’ and sellers’ mortgage rate expectations showed more optimism. The percentage of consumers that expect mortgage rates to go up fell from 54% to 49%, while those who think mortgage rates will stay the same rose to 38%, from 33% one month before. Just 6% said they believe mortgage rates will slide back down.

For its part, Fannie Mae’s economic and strategic group has revised its expectations on purchase and refinance volume due to rates falling back below 3% again. The group has cut its 2021 purchase volume forecast to $1.8 trillion, down $43 billion from a month ago. It also revised its refi origination volume forecast to $2.2 trillion, up $124 billion from last month’s guidance.