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Americans are increasingly hopeful that home prices have peaked and mortgage rates will come back down to Earth, but for now only one in four think it’s a good time to buy a home, according to a monthly survey by mortgage giant Fannie Mae.
While only 23 percent of those surveyed by Fannie Mae in November thought it was a good time to buy a home, that’s up from 14 percent a year ago, when mortgage rates were near post-pandemic peaks.
Close to two-thirds of the 1,050 household financial decision makers participating in the latest National Housing Survey said November was a good time to be selling.
Fannie Mae’s Home Purchase Sentiment Index (HPSI), which distills six questions from the National Housing Survey into a single number, climbed to 75.0 in November, up just 0.4 points from October but 17 percent from a year ago.
“Over the past year, we have seen a significant improvement in general consumer sentiment toward the housing market, largely driven by increased optimism that mortgage rates will fall and improved perceptions of both homebuying and home-selling conditions,” Freddie Mae Chief Economist Mark Palim said in a statement Monday.
Mark Palim
The improvement in sentiment “continues a trend that began about two and a half years ago following the sizable run-up in home prices during the pandemic, and it is likely due in part to consumers’ slow-but-steady acclimation to current market conditions,” Palim said. “Of course, high home prices and high mortgage rates remain the primary reasons why the vast majority of consumers think it’s a ‘bad time to buy’ — trends that we expect to continue into the new year.”
Forecasts issued by economists at Fannie Mae and the Mortgage Bankers Association last month included dramatic downward revisions for projected home sales and a more cautious outlook on the prospects for mortgage rates to come down next year.
Source: Fannie Mae National Housing Survey, November 2024.
While nearly one in four (38 percent) Americans polled in November said they expect home prices to go up in the next 12 months, the percentage who expect prices to fall increased to 25 percent.
With 36 percent expect prices to remain stable, the net share who expect home prices to go up over the next year fell to 12 percent, down from a 2024 high of 28 percent in June.
That’s in line with the views of housing experts polled by Fannie Mae for its Home Price Expectations Survey (HPES), who predict that at the national level, annual home price appreciation will slow from 5.2 percent this year to 3.8 percent in 2025 and 3.6 percent in 2026.
Cooling home price appreciation “may help ease some of the affordability burden and incentivize some households, especially those who have been waiting in the wings, to finally act on their home purchase decision,” Palim said.
Source: Fannie Mae National Housing Survey, November 2024.
Mortgage rates have been another factor making homes less affordable, fueling a lock-in effect that’s made listings scarce in some markets as many would-be sellers have been reluctant to give up the low rate on their existing mortgage.
Close to half of consumers surveyed in November (45 percent) said they expected mortgage rates to go down in the next 12 months, up from 39 percent in October.
While 25 percent of those surveyed still thought rates might have room to go up, the net share of those expecting mortgage rates to fall in the year ahead increased 4 percentage points from October, to 20 percent.
The latest National Housing Survey was fielded from Nov. 1 to Nov. 19, when mortgage rates were still climbing from a 2024 low of 6.03 percent seen on Sept. 17 to a fourth quarter peak of 6.85 percent registered on Nov. 20, according to rate-lock data tracked by Optimal Blue.
Since then, rates have been on a downward trajectory on expectations that the Federal Reserve will continue cutting rates next year, with Optimal Blue data showing 30-year fixed-rate loans averaging 6.56 percent Friday.
During the week ending Nov. 29, purchase mortgage demand picked up for the fourth week in a row to the highest level since January, according to a weekly survey of lenders by the Mortgage Bankers Association.
Source: Fannie Mae National Housing Survey, November 2024.
With the percentage of Americans who said it was a bad time to by falling 3 percentage points from October to November, the net share of those who said it was a good time to buy increased by 6 percentage points, to negative 54 percent.
More than one-third of Americans surveyed in October (36 percent) said they would be more likely to rent than buy if they had to move, a new survey high in records dating to 2010.
But last month the share of consumers who said they would buy a home if they were going to move bounced back 6 percentage points, to 69 percent, and the share who said they’d rent fell to 30 percent.
Source: Fannie Mae National Housing Survey, November 2024.
Americans continue to view the housing market as favoring sellers, with close to two-thirds of those surveyed (64 percent) saying November was a good time to sell, unchanged from October but up from 60 percent a year ago.
Source: Fannie Mae National Housing Survey, November 2024.
Fannie Mae’s Home Purchase Sentiment Index (HPSI), which was often above 90 in the months before the pandemic, continues to bounce back from an all time low of 56.7 seen in October 2022,
Two of six components used to calculate the HPSI — buying conditions and mortgage rate outlook — improved in November, while two others declined. Selling conditions and job loss concern remained unchanged.
Because consumer sentiment that home prices will rise reflects confidence in the housing market, diminishing expectations for home price appreciation have a negative impact on HPSI.
The other HPSI component that declined in November was household income. Only 16 percent of household financial decision makers polled last month expected their income would be significantly higher a year from now, down from 18 percent in October.
Although the question is not factored into the HPSI, 31 percent of Americans polled in November thought the economy was on the right track, up from 24 percent a year ago.
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