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Americans Have Never Felt This Bad About the Housing Market

A whopping 86% of consumers said it's a bad time to buy a home, according to a new Fannie Mae survey.

By Rocio Fabbro, Quartz (TNS)

It’s a bad time to buy a house, at least according to a majority of Americans.

An all-time low of 14% of consumers think it’s a good time to buy a house, down from 20% last month, the latest Fannie Mae Home Purchase Sentiment Index published Friday found. This overwhelming pessimism is based on the fact that consumers believe that home prices and mortgages will continue to rise over the next year, keeping the housing market stubbornly unaffordable.

The median price of a home in the U.S. is $432,812, up 6% from a year ago, according to Redfin, a residential real estate firm. Meanwhile, mortgage applications continued to drop last week as mortgage rates popped back up to a high of 7.07%.

“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” said Doug Duncan, Fannie Mae senior vice president and chief economist. Fannie Mae, or the Federal National Mortgage Association, is the largest mortgage financing provider in the U.S.

“While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability,” he added.

A better second-half of 2024

The share of consumers that believe it’s a good time to sell their home fell marginally from 67% to 64%.

Duncan said that the slight drop-off to the largely positive sentiment from the seller side could be a sign of a more favorable market to come.

“This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future,” Duncan said. The “lock-in effect” refers to homeowners staying in their homes when they otherwise might have moved, which constrains housing supply and buoys prices. Fannie Mae is forecasting improvements to housing inventory that will lead to slightly more sales activity in the latter half of the year.

In a separate survey of a panel of more than 100 housing and mortgage industry experts and academics published Friday, Fannie Mae found that home price growth is expected to cool in the months and years ahead.

The panel projected that annual national home price growth will slow to 4.3% in 2024 and 3.2% in 2025—down significantly from the 6.6% growth in 2023.

“On average, the expert panelists expect only a modest decline in mortgage rates through the rest of the year, and a majority also see the ‘lock-in effect’ weakening, which would likely lead to a gradual uptick in for-sale listings and continued moderation of home price growth over the forecast horizon,” Duncan said.


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