Fannie MaeThe Home Purchase Sentiment Index (HPSI) fell 1.9 points in December to 73.1 – a much higher reading than last year’s levels due to continued optimism about mortgage rates.
The index reported that consumers continue to expect mortgage rates to decline over the next 12 months. In December 2024, the share of consumers who expected a reduction in mortgage rates held steady at 42%, down from 45% in November. However, the ratio is improved compared to December 2023 of 31%.
Stocks expressing optimism about home buying and home selling conditions declined slightly month-over-month, but both segments remained flat year-over-year. Overall, the HPSI increased by 5.9 points compared to this time last year.
“Although the HPSI declined to end the year, consumer sentiment about the housing market ended 2024 above last year’s levels, driven in part by respondents’ continued optimism that mortgage rates will decline,” said Mark Palim, vice president and chief economist. at Fannie Mae.
“However, just over one in five buyers believe it’s a ‘good time’ to buy a home – although that share rose last year, too, after reaching an all-time low of 14% in Q4 2023. Although respondents remain pessimistic about rising house prices and house prices during the pandemic, the increase in the idea of buying houses in 2024 may show a slight adjustment. in generally less expensive market conditions.”
Palim added that Fannie Mae expects “moderate declines in mortgage rates, lower home prices, and higher wage growth to improve the relative affordability of homebuyers in the new year.”
The percentage of respondents who say it is a good time to buy a home decreased slightly from November 2024 from 23% to 22%. Those who say it’s a bad time to buy increased from 77% to 78%, month over month. The number of those who said it was a good time to buy fell by 3 percentage points in the month to 57%.
The share of respondents who said it was a good time to sell a home fell from 64% to 63%, while the percentage who said it was a bad time to sell increased from 35% to 36%.
Respondents who believe house prices will rise within the next 12 months remain unchanged from November’s 38%. On the other hand, those who believe that home prices will decrease increased from 25% to 27%. The share who thought house prices would remain unchanged fell from 36% to 35%.
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