The percentage of U.S. consumers who say it is a good time to buy a home increased to 21% in March, up from 19% in February, indicating that they may be “adjusting their expectations for the housing market,” according to Fannie Mae’s most recent Home Purchase Sentiment Index report.
There is, however, growing pessimism toward mortgage rates: Thirty-four percent of consumers believe mortgage rates will go up over the next 12 months, up from 32% in February, while only 29% of say they believe rates will decline.
Despite the jump in pessimism toward rates, consumer perceptions of both home-buying and home-selling conditions ticked up slightly in March.
Overall, though, the lack of housing affordability continues to weigh on consumers’ belief that it’s a “good time to buy” a home, with only 21% agreeing with that particular sentiment.
Doug Duncan, senior vice president and chief economist for Fannie Mae, says “We’re seeing signs that consumers may be adjusting their expectations for the housing market to better accommodate the higher mortgage rate and home price environment.
“Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month,” Duncan says in the report. “However, consumers took a slightly more pessimistic view on the likely direction of mortgage rates, likely reflecting the fact that actual mortgage rates have moved upward since the start of the year. With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year’s sharp jump in rates, an adjustment that we think could help further thaw the housing market.
“We noted in our latest monthly forecast that we expect to see a gradual increase in home listings and sales transactions in the coming year,” Duncan says. “We believe this will be driven not only by those coming off the sidelines due to a rate-related recalibration, but also by households who may need to move for other life reasons.”
Photo: Grahame Jenkins