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80% of Americans think it’s a bad time to buy a home
Americans are in limbo about the future of the housing market, but they are resolute about their purchasing conditions right now.
Nearly 80% of Americans think it’s a bad time to buy a home, according to the Fannie Mae Home Buying Sentiment Index (HPSI), a survey that assesses confidence in buying and selling homes. The index remained stable in April compared with the previous month as consumers adjusted to high mortgage rates that show little promise of easing. The average rate on a 30-year loan stood at 7.22% last week. Consumer confidence is still high 8% year over year.
Additionally, fewer Americans believe mortgage rates will decrease over the next 12 months, leaving out buyers waiting for improvements in affordability.
“Housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would fall,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, recent data showing stickier-than-expected inflation, rising mortgage rates and continued home price appreciation appear to have given consumers pause regarding the direction of the market.”
A Closer Look at Mortgage Rates
Diminished expectations of a rate decline are becoming a common trend.
In the latest survey, only about 1 in 4 Americans believed rates would fall over the next 12 months, down from nearly 1 in 3 the previous month. In comparison, at the beginning of the year, almost 40% of respondents said they expected rates to fall.
“[Strong economic and job market data] will keep mortgage rates at high levels for the foreseeable future, deterring some potential buyers from entering the housing market,” said Edward Seiler, associate vice president of the Mortgage Bankers Association (MBA).
With rates hovering around 7% for a 30-year loan in recent months, monthly mortgage costs have risen. The national average pay rose from $2,200 in March, from $2,184 in February, according to the MBA. Payments could get even more expensive going forward as 30-year average loan rates exceeded 7% in the last three weeks, with no signs of falling.
See more information: Mortgage Rates As High As 7% – Is This A Good Time To Buy A Home?
Home sellers remain optimistic
In contrast to homebuyers’ woes, a growing number of Americans think now is a good time to sell. The share of respondents confident in sales reached almost 70% in April, up from 60% at the beginning of the year and 62% in the same month last year.
The growing optimism of home sellers can be attributed to the continued growth in home prices across the country. The latest national house price index rose 6.4% in February, according to the national price of the S&P CoreLogic Case-Shiller house in the US.
The story continues
“As interest rates rise, people’s purchasing power declines and so should house prices. But that didn’t happen in this last correction cycle,” said Jon Grauman, founder of Grauman Rosenfeld, a real estate firm in Los Angeles. told Yahoo Finance.
Only about 1 in 4 Americans believed rates would fall in the next 12 months, down from nearly 1 in 3 the previous month. (JUSTIN TALLIS via Getty Images)
Consumers are prepared for high prices – more than 40% of Fannie Mae survey participants expect home prices to rise in the next 12 months, compared to 37% at the beginning of this year.
“We think the overall improvement in consumer perception of home selling conditions bodes well for listings and real estate activity, especially for the segment of the population that may need to relocate for lifestyle reasons and has already begun adjusting their financial expectations at the current mortgage rate and pricing environment,” Duncan said.
Correction: An earlier version of this article listed the incorrect company name Grauman Rosenfeld. We regret the error.
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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