Consumer confidence in the housing market rose to its highest level since February 2022, according to the latest data from the Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index.
The October HPSI increased by 0.7 points to 74.6. The full index is up 9.7 points year-over-year.
Last month, the share of consumers who believed it’s a good time to buy a home increased 1 percentage point to 20%, while the share who think it’s a good time to sell a home declined 1 percentage point to 64%. The HPSI found consumers continue to expect home prices to rise and mortgage rates to fall – the latter component reached a survey high this month.
“While we have seen significant improvement in overall housing sentiment over the past two years, consumers’ perception of homebuying conditions remains strained, with only 20% believing it a ‘good time’ to buy a home, primarily due to high home prices,” said Mark Palim, Fannie Mae senior vice president and chief economist. “In fact, the share citing mortgage rates as the primary driver of their homebuying pessimism declined again this month; however, since the fielding of the survey primarily in the first half of October, mortgage rates moved sharply higher, which may serve to suppress some of the recently observed rate optimism. One effect of the prolonged period of relatively high home prices of the past four years is that we are seeing a slowly growing preference to rent rather than buy on consumers’ next move. With rent growth expected to remain modest in 2025, more consumers may be seeking – and finding – attractive deals in the rental market as they continue saving toward a future home purchase.”
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