Fannie Mae Survey Reveals A Shimmer Of Hope For The Housing Market
Consumers are optimistic about the prospect of mortgage interest rates continuing to drop, which could pump life into a stagnant housing market, according to a monthly consumer survey by Fannie Mae.
In December, a survey high 31% of consumers indicated they expect mortgage rates to go down, while 31% predict they will go up and 36% expect them to remain the same. Consumers are still pessimistic about homebuying conditions, but 17% indicated it’s a good time to buy a home, compared to 14% in November.
“Mortgage rate optimism increased dramatically this month, with a survey-high share of consumers anticipating mortgage rates declines over the next year,” Fannie Mae Vice President and Deputy Chief Economist Mark Palim said.
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The shift in consumer expectations comes on the heels of the recent bond market rally and a downtick in 30-year mortgage rates, from their high of nearly 8% in early November to 6.62% in the past week.
“Homeowners and higher-income groups reported a greater rate of optimism than renters,” Palim said. “In fact, for the first time in our National Housing Survey’s history, more homeowners, on net, believe mortgage rates will go down than go up.”
After reaching more than a dozen record lows in 2020 and 2021, which caused a flurry of homebuying and propelled prices higher, rates hit a 20-year high in October of around 8% before dropping back below 7%.
“A more optimistic rate outlook among consumers may signal an expectation that home affordability pressures will ease in 2024,” Palim said. “Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it’s both a bad time to buy and sell a home and so a more positive mortgage rate outlook may incent some to list their homes for sale, helping increase the supply of existing homes in the new year.”
But that depends on whether mortgage rate declines meet homeowners’ expectations because even if rates fall, elevated home prices are still an issue, especially for first-time homebuyers. Home sales growth is expected to be modest in 2024, Palim said.
The average rate on a 30-year fixed mortgage was 6.61% at the end of December, but is up slightly this month to 6.76%, according to Mortgage News Daily.
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This article Consumers Ride Wave Of Optimism As Mortgage Rates Teeter On A Drop: Fannie Mae Survey Reveals A Shimmer Of Hope For The Housing Market originally appeared on Benzinga.com
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