Although the for-sale housing market has shown some signs of loosening in the past couple of months, persistent high mortgage rates have put a damper on seller attitudes and many of those who want to buy a home are worried about their ability to do so.
The Fannie Mae Home Purchase Sentiment Index fell slightly in August to 71.4 from 71.8, as concerns about selling conditions, increasing home prices and personal finances piled up, according to a Realtor analysis. Nearly a third of respondents said now is a good time to buy a home thanks to strong inventory growth and stabilizing prices, but higher mortgage rates throughout the month kept the housing market at a standstill.
About a third of those surveyed expect rates to start falling, up from 28% last month. A weak jobs report earlier this month and a decline in interest rates bolster the likelihood this prediction will become reality, said Realtor.
The decrease in Fannie Mae’s sentiment index reflects a slight drop in the number of sellers who agreed that now is a good time to sell a home. That percentage fell from 60% to 58% as price reductions and delistings increased and time on the market lengthened.
There was also a sharp decrease in expectations around home prices, with the number of respondents who believe costs will spike falling to 40% from 46%. On the other end, the percentage who believe prices will go down increased from 18% to 22%, said the analysis.
After a dramatic increase in home values between 2021 and 2022, prices have remained relatively stable over the past few years. The market may experience a temporary surge in prices if mortgage rates decrease enough to spur buyer activity, according to Realtor.
Job worries are also dragging down the overall index, with the number of respondents saying they are concerned about losing their employment growing from 24% to 27%. In addition, 12% of respondents said their household income has dropped significantly over the past year, up from 10%. Overall, buying power has decreased as home prices and mortgage rates have outpaced earnings growth.
The survey also found an uptick in the number of respondents who think it would be more difficult to get a mortgage today. However, more respondents think the economy is on track despite fears about personal finances.
Interest in buying a home is strong, with 68% of respondents saying they plan to buy their next home instead of renting it, up 2% from July.
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