Sentiment among prospective homebuyers is improving. Fannie Mae’s Home Purchase Sentiment Index rose by 0.7 points in October to 74.6, marking its highest consumer confidence level since February 2022 and well above the record low from two years ago. Currently, 20% of consumers feel it’s a good time to buy a home, while those who think it’s a good time to sell dropped to 64%.
Consumers generally expect home prices to rise and mortgage rates to fall. The percentage who believe home prices will increase in the next year held at 39%, while those who expect prices to drop stayed at 23%. The percentage predicting prices will remain stable grew slightly to 38%. Meanwhile, optimism for lower mortgage rates is high: 39% expect rates to decline, while only 22% think they’ll rise.
“While we have seen significant improvement in overall housing sentiment over the past two years, consumers’ perception of homebuying conditions remains strained, with only 20% believing it a ‘good time’ to buy a home, primarily due to high home prices,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “In fact, the share citing mortgage rates as the primary driver of their homebuying pessimism declined again this month; however, since the fielding of the survey primarily in the first half of October, mortgage rates moved sharply higher, which may serve to suppress some of the recently observed rate optimism. One effect of the prolonged period of relatively high home prices of the past four years is that we are seeing a slowly growing preference to rent rather than buy on consumers’ next move. With rent growth expected to remain modest in 2025, more consumers may be seeking – and finding – attractive deals in the rental market as they continue saving toward a future home purchase.” Read more