Consumer confidence in the housing market increased in September, as per Fannie Mae’s Home Purchase Sentiment Index (HPSI), which rose to a score of 73.9, the highest in two years.
The share of survey respondents who say it is a good time to buy a home increased 2 percentage points (19%) in September compared with August, while the percentage who say it is a bad time to buy decreased from 83% to 81%.
Conversely, the percentage of respondents who say it is a good time to sell a home (65%) remained unchanged compared with August, while the percentage who say it’s a bad time to sell (35%) increased 1 percentage point.
The share of respondents who say they expect mortgage rates to go down in the next 12 months increased from 39% to 42%, a new survey high – while the percentage who expect mortgage rates to go up increased from 26% to 27%.
The share who think mortgage rates will stay the same decreased from 35% to 31%. As a result, the net share of those who say mortgage rates will go down over the next 12 months increased 2 percentage points month over month to 15%, a second consecutive survey high and the highest in survey history.
“Although most consumers continue to think it’s a ‘bad time’ to buy a home, the recent shift in attitude toward mortgage rates is pushing overall housing sentiment higher, and a growing share are now pointing to high home prices rather than high mortgage rates as the primary sticking point for affordability,” says Mark Palim, senior vice president and chief economist for Fannie Mae, in a statement. “Increased positivity that mortgage rates will continue to fall has driven the HPSI to a 30-month high, but we’ve yet to see consumers’ newfound rate optimism translate into a meaningful increase in home sales activity. Instead, as we noted in our latest housing forecast, existing home sales are on pace to record their lowest annual total since 1995. This signals to us that consumers are paying attention to the easing interest rate environment but still feel stymied by the considerable run-up in home prices over the last four years.”
The share of consumers who expect home prices to increase over the next 12 months increased from 37% to 39% while the percentage who say home prices will go down decreased from 25% to 23%.
The share who think home prices will stay the same remained at 37%. As a result, the net share of those who say home prices will go up in the next 12 months increased 3 percentage points month over month to 16%, Fannie Mae says.
Palim adds that housing sentiment among renters has improved – a promising sign, as they are “a common source of first-time homebuyers.”
“Over the last three months, the share of renters believing it’s a good time to buy a home has risen from 13 percent to 20 percent, while the share expecting mortgage rates to fall has risen from 16 percent to 30 percent,” Palim says. “While these numbers are still relatively low, we think the improvement may signal that some potential homebuyers who have been waiting for mortgage rates to come down may be closer to coming off the sidelines, despite their ongoing concerns about home prices.”
Mortgage Orb- Michael Bates, October 8, 2024
