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A recent report from Fannie Mae on the Home Purchase Sentiment Index indicates that consumers are feeling more optimistic about the housing market. This boost in confidence is fueled by the anticipation of a decrease in mortgage rates within the next year.
According to the survey, 31% of those polled are optimistic, expecting a drop in mortgage rates. In contrast, 31% anticipate rates going up, while 36% believe rates will stay steady. Despite concerns about the overall homebuying climate, there’s been a positive shift in the perception of it being a good time to purchase a home. Seventeen percent of respondents expressed this positivity, up from last month's low of 14%.
Mark Palim, vice president and deputy chief economist at Fannie Mae, attributes this surge in optimism to a recent bond market rally and a significant decrease in 30-year mortgage rates, which fell from nearly 8% in early November to below 7%.
Palim points out a significant change in how homeowners view things, stating, "For the first time in our National Housing Survey’s history, more homeowners, on net, believe mortgage rates will go down than go up." This newfound optimism could indicate a potential easing of home affordability issues in 2024. Palim suggests that this positive outlook might lead some homeowners to put their properties up for sale, potentially increasing the supply of existing homes in the coming year.
However, Palim emphasizes that these expectations will only materialize if mortgage rates do indeed decrease. Despite the hopeful outlook, affordability concerns may persist, especially for first-time homebuyers, given the continued high prices of homes.
The survey implies a possible shift to a buyer’s market in 2024 if mortgage rates align with consumer predictions.
