People May Finally Be Adjusting to Higher Mortgage RatesBy RISMedia Staff
Despite continued pessimism surrounding mortgage rates, home buyers and sellers are feeling a bit more confident in the housing market lately, according to recent data from Fannie Mae.
The latest Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 0.9 points in March to 71.9, its first decline since November 2023. The slight decrease is mainly due to sentiment surrounding mortgage rates, as 34% of consumers now believe that mortgage rates will go up over the next 12 months, up from 32% last month. Despite the jump in pessimism toward rates, Fannie Mae found that consumer perceptions of both home buying and selling conditions ticked up slightly again in March, and both measures have now risen multiple months in a row. 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 percent agreeing with that particular sentiment. The full index is up 10.6 points year over year. “The HPSI remained relatively flat in March, but 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,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month. 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.” Duncan continued, “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. 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.” Report highlights:
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