Housing Market Measures

Households May Finally Be Adjusting To Higher Mortgage Rates

Greater optimism toward homebuying and home-selling conditions, even as pessimism toward rates jumps

The Fannie Mae Home Purchase Sentiment Index reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making.

WASHINGTON, DC – April 8, 2024 – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 0.9 points in March to 71.9, its first decline since November 2023, due primarily to increased pessimism about the direction of mortgage rates. Thirty-four percent of consumers now believe that mortgage rates will go up over the next 12 months, up from 32 percent last month and more than the 29 percent who believe rates will decline. Despite the jump in pessimism toward rates, consumer perceptions of both homebuying and home-selling conditions ticked up slightly again in March, and both measures have now risen multiple months in a row. Overall, though, the lack of housing affordability continues to weigh on consumers’ belief that it’s a “good time to buy” a home, with only 21 percent agreeing with that particular sentiment. The full index is up 10.6 points year over year.

“The HPSI remained relatively flat in March, but we’re seeing signs that consumers may be adjusting their expectations for the housing market to better accommodate the higher mortgage rate and home price environment,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month. However, consumers took a slightly more pessimistic view on the likely direction of mortgage rates, likely reflecting the fact that actual mortgage rates have moved upward since the start of the year. With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year’s sharp jump in rates, an adjustment that we think could help further thaw the housing market. We noted in our latest monthly forecast that we expect to see a gradual increase in home listings and sales transactions in the coming year. We believe this will be driven not only by those coming off the sidelines due to a rate-related recalibration, but also by households who may need to move for other life reasons.”

 

 

 

About the ESR Group
Fannie Mae’s Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.