There’s no respite for home buyers these days.
From rising rates, high home prices, and an uncertain economic outlook, shoppers are finding it hard to jump into purchasing a home.
Fannie Mae noted that the Home Purchase Sentiment Index fell for the seventh straight month in a row, and dropped to the lowest level since October 2011.
Fannie Mae surveyed approximately 1,000 respondents via telephone as part of its National Housing Survey.
Consumers surveyed said that they expect rates to move higher over the next 12 months, and that they expect home prices to decline.
The survey indicates that consumers are possibly holding on until the storm passes, which means either home prices or rates fall.
Rates are back above 7%, according to Mortgage News Daily’s daily rate survey.
According to the Fannie Mae survey, in September, only 19% of consumers said it’s a good time to buy a home. That’s down from 22% from the prior month.
Instead, six in ten said that it’s actually a good time to sell.
“Consumers’ expectation that home prices will decrease matched a survey high, with a higher percentage of consumers believing home prices will decrease … over the next year,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a statement.
That’s “a shift in survey sentiment that had previously only happened in 2011 and at the start of the pandemic in 2020,” he added.
Fannie Mae added that 75% of respondents said that it’s actually a bad time to buy a home, up from 73% the previous month.
Most cited “high home prices and unfavorable economic and mortgage rate conditions as primary reasons,” Duncan explained.
Respondents said they believe home prices will go down, and that mortgage rates will go up in the next year, with the percentage of respondents indicating so rising from 61% to 64%.
People are going to start to accept the fact that higher mortgage rates are the new normal, Christine Cooper, managing director and chief U.S. economist at CoStar Group, told MarketWatch in an interview.
“Maybe [people are] getting a little sticker shock” with mortgage rates doubling over the last year, but “in six months or a year, we’re gonna think, okay, we’re going to be able to mange it,” Cooper said.
“We’re just going through a period of transition where we were expecting it to be this way, and all of a sudden, that’s not the world we’re in any more,” she added. “People will adapt.”
Nevertheless, the bleak consumer outlook reported by Fannie Mae’s respondents portends further weakness in home sales data.
Ultimately, “as long as supply is limited and affordability pressures continue to constrain potential homebuyers via elevated home prices and mortgage rates,” Duncan said, “we expect home sales will remain sluggish.”
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at firstname.lastname@example.org