The latest data analysis of the Home Purchase Sentiment Index (HPSI) published by Fannie Mae (OTCMKTS:FNMA) suggests households have become acclimated to higher mortgage rates.
The HPSI decreased 0.9 points in March to 71.9, its first decline since November 2023, with 34% consumers now believing that mortgage rates will go up over the next 12 months, with 29% predicting rates will decline. Only 21% of consumer felt now is a good time to buy a house, compared with 79% who believed it was a bad time.
“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’s 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,” Duncan added, “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 need to move for other life reasons.”
;
