Sentiment among prospective homebuyers appears to have improved. This is according to the Fannie Mae Home Purchase Sentiment Index (HPSI), which rose by 1.8 points to 73.9—its highest level in more than two years. The survey shows that 42% of respondents believe mortgage rates will decrease within the next year, up from 39% in August. In contrast, 31% expect rates to remain the same, while 27% anticipate an increase. Despite this optimism about mortgage rates, many respondents also believe home prices will rise over the next 12 months, which could hamper any improvement in affordability. While perceptions of homebuying conditions improved slightly, they remain close to historical lows, with just 19% of Americans believing it's a good time to buy a home. On the other hand, 65% of respondents feel it's a good time to sell.
“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,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “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.”
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