Consumer confidence in the housing market increased in October, reaching its highest level since February 2022, according to Fannie Mae’s Home Purchase Sentiment Index.
The share of consumers who think it’s a good time to buy a home increased to 20%, while the share who think it’s a good time to sell a home declined to 64%.
The share of survey respondents who say home prices will go up in the next 12 months remained unchanged at 39%, while the percentage who say home prices will go down also stayed steady at 23%.
In addition, the percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 42% to 39%, while the percentage who expect mortgage rates to go up decreased from 27% to 22%, a new survey low.
“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 percent believing it a ‘good time’ to buy a home, primarily due to high home prices,” says Mark Palim, senior vice president and chief economist for Fannie Mae, in a statement. “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,” Palim adds. “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.”
Survey respondents also expressed continued confidence in the job market: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months increased from 77% to 79%, while the percentage who say they are concerned decreased 2 percentage points to 20%.
Photo: Priscilla Du Preez