“Although most consumers continue to think it’s a ‘bad time’ to buy a home, the recent shift in attitude toward mortgage rates is pushing overall housing sentiment higher, and a growing share are now pointing to high home prices rather than high mortgage rates as the primary sticking point for affordability,” Fannie Mae chief economist Mark Palim said in the report.
Roughly 39% of respondents expect home prices to rise over the next year, which would dampen some of the affordability benefits from lower mortgage rates. That’s up from 37% in August. Those expecting prices to fall dropped from 25% to 23%, while 37% expect prices to remain the same.
Although the HPSI spiked to a 30-month high, Palim said we’ve yet to see consumers’ newfound rate optimism translate into a meaningful increase in home sales activity.
“Instead, as we noted in our latest housing forecast, existing home sales are on pace to record their lowest annual total since 1995,” he added. “This signals to us that consumers are paying attention to the easing interest rate environment but still feel stymied by the considerable run-up in home prices over the last four years.”
Only 19% of respondents said it’s a good time to buy a home, up 2% from the previous month but still near record lows. Meanwhile, 65% of consumers feel it’s a good time to sell, which has remained unchanged since August.