Consumers showed increased optimism about the future direction of mortgage rates, but this has not translated into significant changes in overall sentiment about homebuying, according to the latest Fannie Mae Home Purchase Sentiment Index, accessed by Funds Society.
In August, the index rose by 0.6 points, reaching 72.1. Additionally, 39% of consumers—the highest figure ever recorded in the survey—indicated that they expect mortgage rates to decrease in the next 12 months, compared to 29% the previous month. This compares to 35% expecting rates to remain the same and 26% expecting them to increase, the report adds.
On another note, a larger percentage of consumers also indicated that they expect home prices to decrease over the next 12 months, though the majority still expects prices to rise.
Despite improved affordability prospects, consumers’ perception of conditions for buying a home remained unchanged, with only 17% saying it’s a good time to buy. In contrast, 65% believe it’s a good time to sell a home.
Moreover, the study revealed that expectations for declining home prices have risen. While 37% believe prices will increase—a drop from 41% last month—the percentage expecting prices to decrease grew from 21% to 25%. The proportion of those who believe home prices will remain the same held steady at 37%.
Mortgage Rate Expectations: The percentage of respondents who believe mortgage rates will decrease in the next 12 months rose from 29% to 39%, while the percentage expecting rates to increase fell from 31% to 26%. The proportion expecting rates to remain the same dropped from 38% to 35%. As a result, the net share of those anticipating mortgage rates to drop increased by 16 percentage points month-over-month, reaching 13%, the highest figure in the survey’s history.
Job Loss Concerns: The percentage of respondents who are not worried about losing their job in the next 12 months rose from 77% to 78%, while those expressing concern remained the same as last month at 21%. The net share of those not worried about losing their job increased by 1 percentage point month-over-month, standing at 57%.
Household Income: The percentage of respondents reporting their household income is significantly higher than it was 12 months ago dropped from 18% to 17%, while those saying their income is significantly lower rose from 11% to 14%. The proportion indicating their income is roughly the same decreased from 69% to 68%. As a result, the net share of those stating their household income is significantly higher than a year ago fell by 4 percentage points month-over-month, standing at 3%.
