A survey released Monday by Fannie Mae showed that about 82 percent of consumers said July was a "bad time to buy a home," up from 78 percent in June. Fannie Mae released the survey as part of its monthly Home Buying Sentiment Index. The index rose 0.8 points to 66.8 in the latest July report.

Doug Duncan, Fannie Mae's chief economist and senior vice president, said consumers are citing high home prices and unfavourable mortgage rates. Additionally, the percentage of consumers who expect home prices to continue to rise has also been climbing steadily since March, which may only exacerbate the perception that home prices are unaffordable.

Duncan added that home prices are likely to remain high because few homeowners in the survey expressed interest in selling their homes. Some 64 per cent of respondents said it was a good time to sell, unchanged from last month.

He noted that the "good time to sell" component has "not seen much movement" in recent months, "suggesting that the current low level of existing homes for sale is likely to continue in the near term."

So what's going on? Research suggests that 30-year fixed-rate mortgage rates could stabilise at around 6% in the short term, but in a more optimistic scenario could move lower over the next few years.

Melissa Cohn, regional vice president of William Raveis Mortgage, told Market Watch last month that her "ideal" mortgage rates are 3 to 4 percent, but she also acknowledged that they are historically low during a pandemic.

According to the National Association of Realtors, sales of used homes fell 3.3 per cent in June, largely due to a shortage of homeowners selling their homes. The typical resale home sold for $410,200, the second-highest price since the National Association of Realtors began tracking the data in 1999.

Fannie Mae said four in 10 respondents expect home prices to rise in the next 12 months. However, nearly half of the respondents still expect mortgage rates to rise, and 38 per cent expect rates to stay the same.

Duncan added: "While consumers are expressing confidence in components related to their personal finances, it is unlikely that we will see housing sentiment catch up with other broader economic confidence indicators," "unless there is a meaningful improvement in the affordability of home ownership."

A typical monthly payment, including principal and interest, for a $443,000 home purchased in July was $2,308, according to Black Knight.

That means a household earning the median income would need to spend 36 per cent of its paycheck on a mortgage. That's the second-highest number in the past 37 years, the company said.