A growing share of the American public thinks it’s a good time to buy a house, though people remain wary of lingering high mortgage rates and prices.
Fannie Mae’s Home Purchase Sentiment Index reached its highest point in October since February 2022, as 20% of consumers reacted positively to the homebuying climate. That’s up one percentage point from the company’s previous survey a month earlier. People said they expect to see mortgage rates continue to fall but they also expect home prices to keep rising.
Consumers were surveyed between Oct. 1 and Oct. 18, after the Federal Reserve acted in September to cut a key interest rate that affects mortgage rates. Rates began edging up after that survey was conducted.
“While we have seen significant improvement in overall housing sentiment over the past two years, consumers’ perception of homebuying conditions remains strained," said Mark Palim, Fannie Mae’s chief economist. “Since the fielding of the survey, mortgage rates moved sharply higher, which may serve to suppress some of the recently observed rate optimism.”
Rates have climbed in recent weeks, with the average rate for a 30-year fixed mortgage hitting 6.7% in the last week of October. But rates were more than a percentage point lower in mid-October than a year earlier, Freddie Mac economist Sam Khater noted in a statement last month. He said uncertainty about the upcoming presidential election and the next jobs report likely contributed to rising rates since then.
One impact of the ongoing high home prices across the United States is that more people are expressing a preference for renting rather than buying, Palim said.
“Consumers may be seeking — and finding — attractive deals in the rental market as they continue saving toward a future home purchase,” he said.
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Applications for mortgages declined in the week that ended Nov. 1 for the sixth straight week, according to the Mortgage Bankers Association. The number of people applying to buy a home was at its lowest level since mid-August, while refinance applications hit their lowest point since May.
Home purchase sentiment is measured based on answers consumers give in a monthly survey to six questions about housing market conditions. In addition to their views of the homebuying environment, respondents are also asked whether their jobs and incomes are stable. More consumers said in October they were not concerned about losing their jobs in the next year; the survey did not find a notable change in consumers’ household income from a year earlier.