Lack of inventory, high home prices and rising mortgage interest rates sapped home sales in 2018, according to a Fannie Mae’s fourth quarter Mortgage Lender Sentiment Survey.
Mortgage executives participating in the survey say increasing home construction and offering consumer subsidies, such as a first-time homebuyer tax credit, could improve affordability for low- and moderate-income homebuyers.
Forty-eight percent of lenders polled fingered low inventory as the main contributor to slow home sales growth last year, while 24% tied the slowdown to rising interest rates.
Twenty percent said high home prices hurt sales.
Only 2% of lenders believed that “insufficient consumer income” was behind the decline in home sales, while another 2% reported that a “lack of mortgage products tailored for first-time buyers or low- to moderate-income families” drove the decline.
When asked for the most helpful idea to improve affordability for low- and moderate-income homebuyers, 45% of lenders surveyed cite “increasing the supply of housing stock,” 18% cite “offering consumer subsidies,” and 10% cite “offering more loan choices.”
The subsidies to consumers could come in the form of down payment assistance, assistance for closing costs, or a first-time homebuyer tax credit.
Increasing the housing stock could be assisted by easing zoning regulations and density restrictions and renovating existing stock.
Finally, lenders report that Fannie Mae and Freddie Mac could help alleviate the housing affordability gap with grants and incentives to fund affordable development.
Other suggestions from those surveyed include consolidating and standardizing state and local down payment assistance programs and offering closing costs assistance, as well as mortgage loans to fund renovations and special loan programs for first-time home buyers.