Real Estate

Consumer housing sentiment fell for the first time since November

Join the movement at Inman Connect Las Vegas, July 30 – August 1! Seize the moment to take charge of the next era in real estate. Through immersive experiences, innovative formats and an unparalleled lineup of speakers, this gathering becomes more than a conference – it becomes a collaborative force shaping the future of our industry. Reserve your tickets now!

According to the results of a March survey released Monday by Fannie Mae, expectations that mortgage rates will decline over the next 12 months faded, consumer sentiment about housing market conditions for the first time since November. is affecting

Fannie Mae’s Home Purchase Sentiment Index takes six questions from the mortgage giant’s more comprehensive monthly National Housing Survey and distills them into one number.

The index fell 0.9 points to 71.9 in March, although the percentage of consumers who said it was a good time to buy or sell rose slightly in March, and most homeowners and renters said they were confident. That house prices are not low. to be destroyed.

Three other components of the index – concerns about job cuts and the outlook for household incomes and mortgage rates – fell, bringing the overall index down 1 percent.

Doug Duncan

“The HPSI remained relatively flat in March, but we are seeing signs that consumers are adjusting their expectations for the housing market to better adjust to the higher mortgage rate and home price environment,” Fannie Mae Chief Economist Doug Duncan said, Statement Which puts a positive spin on numbers.

Despite the decline in sentiment, a majority of Americans surveyed in March (68 percent) said they would try to buy a home instead of rent if they were going to move, in line with past surveys.

“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 said. “We believe this will be driven not only by people moving out due to rate hikes, but also by households who may need to move for other life reasons. Is.”

Looking back a year, the Home Purchase Sentiment Index (HPSI) has increased by 10.6 points. But the index has a ways to go before it returns to pre-pandemic levels, when it often rises above 90.

Housing affordability weighs on consumer sentiment, with just 21 percent surveyed in March saying it’s a good time to buy a home.

That’s up two percentage points from February and seven percentage points from November, when just 14 percent of consumers thought it was a good time to buy, the lowest on record since the 2010 survey.

With the percentage of consumers who said March was a bad time to buy down from 81 percent in February to 79 percent, the net share who said it was a good time to buy rose 4 percentage points each month to negative 58 percent. went.

Tough conditions for buyers are often good news for sellers, and 66 percent of Americans in a Fannie Mae survey agreed that March was a good time to sell, up from 65 percent in February and 58 percent a year ago. was

With the percentage who said March was a bad time to sell up to 34 percent, the net share who said it was a good time to sell rose two percentage points over the month to 32 percent.

With 40 percent of those surveyed in March expecting home prices to rise over the next 12 months and 38 percent expecting them to stay the same, more than three-quarters of Americans have some concern that home prices will rise. Time can also fall quickly.

The percentage who expect home prices to fall in the next 12 months fell to 20 percent, from 23 percent in February and 31 percent a year ago.

While falling house prices may be welcomed by many homebuyers, the HPSI sees expectations that house prices will fall as a sign of pessimism. So a 1 percent increase in the net share of those who said they expected house prices to rise over the next 12 months had a positive effect on the index.

The main factor pushing down the HPSI in March was the declining number of Americans who believe mortgage rates will decrease over the next 12 months.

Only 29 percent of those surveyed in March said they expect mortgage rates to fall in the next year, down from 35 percent in February.

34 percent expect mortgage rates to rise and 36 percent expect mortgage rates to go down over the next 12 months, with net equity expectations falling to negative 5 percent from February to March, down eight percentage points. Is.

Mortgage rates are on the rise this spring as worrisome inflation data has quelled speculation that the Federal Reserve may cut short-term interest rates before June. The recovery in mortgage rates has already dampened demand for mortgages from homebuyers, after adjusting for the seasonal bump that typically occurs in the spring.

Rates on 30-year fixed-rate mortgages have been flirting with 7 percent this spring, reaching 6.89 percent on Friday. The best blue Lock data rate. While economists at Fannie Mae and the Mortgage Bankers Association remain optimistic. Mortgage rates came down Over the next 12 months, the decline may not be as quick or as rapid as it once was.

In a ___ March 21 forecast, MBA economists forecast that rates on 30-year fixed-rate mortgages will fall to 6.1 percent by the end of this year, and will average 5.6 percent in Q4 2024. In a forecast also released in March, Fannie Mae economists said they did not. Imagine 30-year fixed-rate mortgage rates reaching 6 percent by Q4 2025.

“With the historically low rates of the pandemic era now firmly behind us, some households appear to be crossing the hurdle of last year’s sharp jump in rates, an adjustment that our “I think that could help further thaw the housing market,” Duncan said Monday.

Despite not being included in calculating HPSI, 58 percent of those surveyed by Fannie Mae in March said they thought it would be difficult to get a mortgage, up from 54 percent in February and 52 percent a year earlier.

While only 23 percent of Americans in a March Fannie Mae survey said they were worried about losing their job, that’s up from 22 percent in February and 21 percent a year ago. The net share of people who said they were not worried about losing their job fell two percentage points from February to March, the overall home buying sentiment index fell.

Also weighing on the index was a slight increase in the percentage of consumers who said their household income was significantly lower than a year ago.

12 percent reported a decrease in income and the percentage reporting higher income was unchanged at 19 percent, with the net share of consumers reporting significantly higher household income falling by two percentage points from February to March. happened

While the strength of the economy is one reason mortgage rates are rising again this year, 71 percent of Americans in a March Fannie Mae survey said they think the economy is on the wrong track.

That’s up from 68 percent in February, but below the 2023 high of 78 percent registered in October.

Consumer sentiment about the economy is not included in the HPSI.

Get Inman’s Mortgage Short Newsletter delivered to your inbox. A weekly roundup of all the big news from the mortgage and foreclosure world is provided every Wednesday. Click here to subscribe.

Email Matt Carter

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button