Consumers are more confident in the housing market than they have been in the past two years, with many expecting mortgage rates to fall over the next 12 months.
The Fannie Mae Home Buyer Sentiment Index rose 1.8 points in September to 73.9, the highest reading in more than two years, according to data released Monday. The index rose more than 9 points compared to the same period last year.
42% of survey respondents expect mortgage rates to fall over the next 12 months, a record high, up from 39% the previous month. Still, just 19% think now is a good time to buy a home, near an all-time low.
“Although most consumers continue to believe that it is a ‘bad time’ to buy a home, recent changes in attitudes towards mortgage rates have lifted overall housing sentiment, leading to a decline in mortgage rates. Increasingly, households are citing high home prices rather than height, which is the biggest bottleneck in affordability,” Mark Parim, Fannie Mae’s senior vice president and chief economist, said in a statement.
65% of survey respondents think now is a good time to sell a home. Additionally, 39% of people expect house prices to rise over the next 12 months, up from 37% last month.
Consumers are feeling optimistic that mortgage rates will fall, but interest rates have been trending upward in recent days. Friday’s strong jobs report raised the possibility that the Federal Reserve will cut interest rates slightly later this year, pushing mortgage rates and the yield on the U.S. Treasuries that support them higher.
Read more: How the Federal Reserve’s interest rate decisions affect mortgage rates
The average interest rate on a 30-year mortgage was 6.53% on Friday, according to Mortgage News Daily. This is higher than Freddie Mac’s weekly average of 6.12% announced Thursday.
The Fannie Mae Index uses questions from the National Housing Survey, which was conducted between September 1 and September 18 among more than 1,000 household decision makers.
A real estate agent’s sign stands outside a home for sale in Toronto, Ontario, Canada, on May 20, 2021. Reuters/Chris Helgren/File Photo (Reuters/Reuters)
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