According to the Fannie Mae Home Purchase Sentiment Index (HPSI), nearly 80% of Americans believe it is not a favorable time to buy a house. The index remained unchanged in April compared to the previous month, reflecting consumers’ adjustment to persistently high mortgage rates. The average rate for a 30-year loan stood at 7.22% last week, with consumer confidence showing an 8% increase year over year.
Additionally, fewer Americans anticipate a decline in mortgage rates over the next 12 months, leading potential buyers to wait for improved affordability. Doug Duncan, Fannie Mae’s Senior Vice President and Chief Economist, noted that housing sentiment had risen from November through February primarily due to consumer expectations of lower mortgage rates. However, recent data on inflation, rising mortgage rates, and continued home price appreciation have caused consumers to reassess the market’s direction.
Expectations of declining rates have diminished, with only about 1 in 4 Americans anticipating a rate drop over the next year. This is a decrease from nearly 1 in 3 respondents in the previous month. At the beginning of the year, nearly 40% of survey participants expected rates to fall.
Edward Seiler, Associate Vice President of the Mortgage Bankers Association (MBA), emphasized that strong economic and job market indicators will likely maintain mortgage rates at elevated levels, deterring some potential buyers from entering the housing market.
With 30-year loan rates averaging around 7% in recent months, monthly mortgage costs have increased. According to the MBA, the national median payment exceeded $2,200 in March, up from $2,184 in February. With average rates surpassing 7% for the past three weeks and showing no signs of decline, monthly payments may continue to rise in the future.
While homebuyers face challenges, an increasing number of Americans view the current moment as opportune for selling. In April, nearly 70% of survey respondents expressed confidence in selling, up from 60% at the year’s outset and 62% in the same period last year. The growing optimism among home sellers may stem from the sustained growth in home prices across the nation. According to the S&P CoreLogic Case-Shiller US National Home Price Index, the latest data indicates a 6.4% increase in February.
Jon Grauman, founder of Grauman Rosenfeld, a real estate firm in Los Angeles, noted, “As interest rates go up, people’s purchasing power goes down, and thus, so should home prices. But that hasn’t happened in this latest correction cycle.” Consumers are prepared for elevated prices, with over 40% of Fannie Mae’s survey participants anticipating further home price increases over the next 12 months, compared to 37% earlier this year.
Source: Fannie Mae National Housing Survey
