Home-buying sentiment in 2023 is glum thanks to high mortgage rates and home prices, according to a new survey
\nHome-buying sentiment is glum as we enter 2023, thanks to high mortgage rates and home prices, according to new research.
\nFannie Mae’s (FNMA)Home Purchase Sentiment Index rose slightly in December by 3.7 points, to 61, the company said Monday. The index hit an all-time low in October.
\nIn December, 21% of the 1,000 respondents surveyed said they believe “it’s a good time to buy.” Last month, only 16% said that it was a good time to buy a home.
\nDespite the slight improvement, “the [index] remains very low by historical standards, particularly the ‘good time to buy’ component, and respondents continue to cite high home prices and unfavorable mortgage rates as the primary reasons for their pessimism,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
\nHome prices remain elevated, and mortgage rates are firmly above 6% High rates add hundreds of dollars to a buyer’s monthly budget.
\nBut buyers are starting to feel more optimistic about the future: The share of respondents who said mortgage rates will go down in the next year increased from 10% to 14%, according to the Fannie Mae survey.
\nBuyers also expressed a belief that home prices may also fall. The share of respondents saying home prices will drop in the coming year grew from 34% to 37%.
\nYet even as rates and home prices come down, “as we enter 2023, we expect affordability to remain the top challenge for potential home buyers,” Duncan said, as those two factors may not be enough to “produce sufficient purchasing power.”
\nSellers, on the other hand, are feeling even more despondent about the housing market.
\nAccording to Fannie Mae, the share of respondents who say it’s a bad time to sell a home increased from 39% to 42%.
\nMany current homeowners “may continue to wait to list their properties, since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable,” Duncan noted.
\n“We think the resulting tension will contribute to a continued decline in home sales in the coming months,” he added.<\/p>\n