There was a slight decline in a key measure of homebuyer sentiment in April, despite lower mortgage rates.
Fannie Mae’s Home Purchase Sentiment Index was down 1.5 points to 88.3, following a strong 5.5 point rise in March, with the ‘Good Time to Buy’ component weighing on the index at 14%, down 8 percentage points.
Even though many respondents were more confident in the economy and their income – the net share of those who say their household income is significantly higher than it was 12 months ago increased 2 percentage points to 22% - it appears that would-be buyers are expecting better conditions to come.
"Households remain upbeat about economic activity but have more mixed attitudes toward the housing market," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "While home selling confidence remains strong and more consumers on net expect mortgage rates to decline over the next year, respondents walked back some of their buying optimism from March.”
The net share of Americans who say mortgage rates will go down over the next 12 months increased 5 percentage points to -40%, up 8 percentage points from the same time last year.
Lower house prices
And fewer people are expecting house prices to be higher in 12 months – a net share of 36%, down 2 percentage points from March and down 13 percentage points from the same time last year.
“Improving perceptions of income gains and a softening home price growth outlook should help support housing demand. However, increasing expectations among consumers that mortgage rates will continue to be favorable for some time will likely gain additional support following last week's Fed meeting – and may also be reducing their urgency to buy,” added Duncan.