Consumer confidence in the housing market improved significantly in November, rising to a score of 75.0 on the Fannie Mae Home Purchase Sentiment Index.
In the monthly survey, the share of consumers who say it is a good time to buy a home increased, relative to the previous month’s survey – while the share who say it is a bad time to buy a home decreased.
In addition, a higher percentage of consumers say they expect home prices will decrease in the next 12 months. And a higher percentage say they expect mortgage rates will decrease in the next 12 months.
One reason for the rosier outlook is that consumers might be acclimating to the higher mortgage rate and home price environment, Fannie Mae notes.
Only 23% believe it’s a “good time to buy a home.”
Still, that’s much better than 14% in November.
“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 home buying and home-selling conditions,” says Mark Palim, senior vice president and chief economist for Fannie Mae, in a statement. “Notably, this 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.
“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,” he says.
Overall, most survey respondents (78%) remain confident that they will not lose their jobs in the next 12 months.
“Fortunately, a sharply growing share of consumers say they expect their personal financial situation to improve over the next year,” Palim says. “Additionally, more consumers expect home price growth to slow, a belief recently shared by our expert panelists, as well, which 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.”
Photo: Mohamed Nohassi