Consumer confidence in the housing market waned in December, causing Fannie Mae’s Home Purchase Sentiment Index (HPSI) to drop 1.9 points compared with November to a score of 73.1.
However the index is up 5.9 points compared with December 2023, due in part to ongoing mortgage rate optimism: A plurality of consumers continues to expect mortgage rates to decrease over the next 12 months.
The share of survey respondents who say it is a good time to buy a home decreased from 23% to 22%, while the percentage who say it is a bad time to buy increased from 77% to 78%.
The share of respondents who say it is a good time to sell a home decreased from 64% to 63%, while the percentage who say it’s a bad time to sell increased from 35% to 36%.
Slightly more consumers say they believe home prices will go down in the next year – but this metric is basically flat compared with November.
The share of consumers who say they are concerned about job loss in the coming year increased from 20% to 22%.
“Even though the HPSI fell to end the year, consumer sentiment toward the housing market finished 2024 substantially above year-ago levels, attributable in part to respondents’ ongoing expectations that mortgage rates will decline,” says Mark Palim, senior vice president and chief economist for Fannie Mae, in a statement. “However, just over one-in-five consumers believes it is a ‘good time’ to buy a home – although that share has risen over the last year, too, after reaching an all-time low of 14 percent in the fourth quarter 2023.”
“While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in home buying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions,” Palim adds. “As noted in our recently published predictions-for-2025 forecast commentary, we expect a modest decline in mortgage rates, decelerating home price growth, and higher wage growth to improve the relative affordability of purchasing a home in the new year, though consumers’ experiences will likely differ depending on where they live. As such, we think home purchase opportunities will still require market savviness by would-be homebuyers in what is expected to remain, broadly speaking, a highly competitive housing market.”
Photo: Julien Maculan
