As uncertainty looms over the direction of the housing market, a significant majority of Americans, nearly 80%, believe now is not the right time to purchase a home, according to the latest Fannie Mae Home Purchase Sentiment Index. The index remained stable in April, echoing the sentiments from the previous month amid high mortgage rates that continue to deter potential buyers. The average rate for a 30-year mortgage was recorded at 7.22% last week, with consumer confidence in the housing market showing an 8% increase year over year.
The survey also highlighted a declining optimism regarding the possibility of lower mortgage rates in the next 12 months, further discouraging potential homebuyers who are waiting for more favorable conditions.
Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, noted that while housing sentiment had improved from November through February due to the expectation of falling mortgage rates, recent indicators of persistent inflation, rising mortgage rates, and continuous home price appreciation have made consumers cautious about the market’s future.
Additionally, the Mortgage Bankers Association indicates that high economic and job market strength will likely maintain elevated mortgage rates, sidelining potential buyers. Edward Seiler, MBA’s Associate Vice President, remarked on the challenging conditions that have kept the rates around 7% for a 30-year loan in recent months. The national median mortgage payment rose slightly from $2,184 in February to over $2,200 in March, with the potential for further increases as the average rate on a 30-year loan has exceeded 7% for the last three weeks.
Contrary to the grim buying sentiment, the outlook for selling homes appears more optimistic. Nearly 70% of the survey participants in April believed it was a good time to sell, up from 60% at the start of the year. This confidence among sellers is driven by continued growth in home prices across the nation, with the latest S&P CoreLogic Case-Shiller US National Home Price Index reporting a 6.4% increase in February.
Jon Grauman, founder of the Grauman Rosenfeld real estate firm in Los Angeles, commented on the anomaly where rising interest rates have not dampened home prices as expected. Meanwhile, over 40% of survey respondents anticipate home prices will rise in the next year, up from 37% earlier.
Fannie Mae’s Duncan concluded that the improved sentiment regarding home-selling conditions should positively impact listings and housing activity, especially for those needing to relocate due to lifestyle changes and who are adjusting their financial expectations to align with current rates and prices.
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