HousingWireHousingWire
Fannie Mae‘s Home Purchase Sentiment Index (HPSI) decreased 1.9 points in December to 73.1 — a figure substantially higher than year-ago levels due to ongoing mortgage rate optimism.
The index reported that consumers continue to expect mortgage rates to decline over the next 12 months. In December 2024, the share of consumers that expected mortgage rate shrinkage held steady at 42%, lower than November’s 45%. However, the measure is improved compared to December 2023’s 31%.
The shares expressing optimism toward homebuying and home-selling conditions declined slightly month over month, but both components remain up year over year. Overall, the HPSI is up 5.9 points compared to this time last year.
“Even though the HPSI fell to end the year, consumer sentiment toward the housing market finished 2024 substantially above year-ago levels, attributable in part to respondents’ ongoing expectations that mortgage rates will decline,” said Mark Palim, vice president and chief economist at Fannie Mae.
“However, just over one in five consumers believes it is a ‘good time’ to buy a home – although that share has risen over the last year, too, after reaching an all-time low of 14% in Q4 2023. While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in home buying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions.”
Palim went on to say that Fannie Mae expects “a modest decline in mortgage rates, decelerating home price growth, and higher wage growth to improve the relative affordability of purchasing a home in the new year.”
The percentage of respondents who say it is a good time to buy a home slightly declined from November 2024’s 23% to 22%. Those who say it is a bad time to buy increased from 77% to 78%, month-over-month. The net share of those who say it is a good time to buy shifted down by 3 percentage points month over month to -57%.
The share of respondents who say it is a good time to sell a home decreased from 64% to 63%, while the percentage who say it’s a bad time to sell increased from 35% to 36%.
Respondents who believe home prices will rise within the next 12 months remained unchanged from November’s 38%. On the flip side, those who believe home prices will go down increased from 25% to 27%. The share who think home prices will stay the same decreased from 36% to 35%.
