Sentiment toward buying and selling homes improves as buyers adapt to market realities

A new record-high share of potential homebuyers now believe mortgage rates will decline in the next 12 months as consumers acclimate to current market conditions.
The Fannie Mae Home Purchase Sentiment Index (HPSI) rose to 75 in November, marking a 10.7-point increase from the same time last year. A record-high share of respondents now believe mortgage rates will fall in the next 12 months, even as high home prices and elevated rates remain a barrier for many potential buyers.
"Over the past year, we have seen a significant improvement in general consumer sentiment toward the housing market, largely driven by increased optimism that mortgage rates will fall and improved perceptions of both homebuying and home-selling conditions," said Fannie chief economist Mark Palim.
"Notably, this improvement in sentiment continues a trend that began about two and a half years ago following the sizeable run-up in home prices during the pandemic, and it is likely due in part to consumers' slow-but-steady acclimation to current market conditions.”
While only 23% of respondents feel it’s a good time to buy a home, this represents an increase from 20% in October and a significant jump from 14% last November. Meanwhile, 64% of respondents believe it’s a good time to sell, unchanged from the previous month, but up from last year.
The share of consumers who believe mortgage rates will decrease over the next year climbed to 45%, up from 39% the previous month. Fewer respondents expect home prices to rise, with 38% predicting increases compared to 39% in October.
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Concerns about job security remained stable, with 78% of employed respondents expressing no worries about losing their job. However, perceptions of household income have softened slightly, with fewer respondents reporting significant income growth compared to the previous month.
"Fortunately, a sharply growing share of consumers say they expect their personal financial situation to improve over the next year,” Palim said in the report. “Additionally, more consumers expect home price growth to slow, a belief recently shared by our expert panelists, as well, which may help ease some of the affordability burden and incentivize some households, especially those who have been waiting in the wings, to finally act on their home purchase decision.
“Of course, high home prices and high mortgage rates remain the primary reasons why the vast majority of consumers think it's a 'bad time to buy' — trends that we expect to continue into the new year."
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