The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index (HPSI) closed 2023 on the upswing with a 2.9-point rise in December to 67.2.
The year-end increase was attributed to a spike in the number of consumers expecting mortgage rates to go down over the next 12 months. In December, a survey-high 31% of consumers indicated that they expect mortgage rates to go down, while 31% expect them to go up and 36% expect rates to remain the same.
While consumer perceptions of homebuying conditions remained mostly negative, the component regarding whether it is a good time to buy a home ticked up slightly month over month, with 17% of consumers now indicating the time was right – last month that share was 14%, a survey record low.
Overall, the full index is up 6.2 points year-over-year.
“Mortgage rate optimism increased dramatically this month, with a survey-high share of consumers anticipating mortgage rate declines over the next year,” said Mark Palim, vice president and deputy chief economist at Fannie Mae. “This significant shift in consumer expectations comes on the heels of the recent bond market rally and an already-significant downtick in 30-year mortgage rates, from their high of nearly 8% in early November to 6.62% as of this past week. Notably, homeowners and higher-income groups reported greater rate optimism than renters; in fact, for the first time in our National Housing Survey’s history, more homeowners, on net, believe mortgage rates will go down than go up.”
