While consumer sentiment about the housing market brightened for the third consecutive month, affordability challenges mean only few consider now a good time to buy, Fannie Mae said.
The government-sponsored enterprise's Home Purchase Sentiment Index rose 0.6 points to 61.6 in January from
"For consumers, the same affordability issues are persisting, as they continue to indicate that high home prices and high mortgage rates make it a 'bad time to buy' a home," Doug Duncan, Fannie Mae's chief economist, said in a press release. "The latest survey data also indicated that the majority of consumers expect home prices to decrease or remain flat over the next year, which may incentivize some potential homebuyers to delay their purchase decision."
Home price growth is slowing, the latest CoreLogic index report said. Prices grew 6.9% in December compared with the previous year, but were
CoreLogic expects prices to decline another 0.2% between December and January but will grow by 3% by December 2023.
"But while prices continued to fall from November, the rate of decline was lower than that seen in the summer and still adds up to only a 3% cumulative drop in prices since last spring's peak," said Selma Happ, CoreLogic chief economist, in a press release.
In particular, the exurbs — the neighborhoods at the edge of a metropolitan area bordering rural locales — are seeing a price correction as the pandemic-fueled boom ends.
"While price deceleration will likely persist into the spring of 2023, when the market will probably see some year-over-year declines, the recent decrease in mortgage rates has stimulated buyer demand and could result in a more optimistic home buying season than many expected," Happ said.
Right now, however, only 17% of Fannie Mae survey participants called January a good time to buy, versus 82% that said it was a bad month.
On the other side of the transaction, 59% said it was a good time to sell, versus 39% with the opposite opinion.
"Although 'good time to sell' sentiment ticked upward this month, it's still much lower than it was a year ago, as purchase affordability remains seriously constrained and mortgage demand has receded," Duncan said. "Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months."
Respondents were evenly split regarding home price movements, with 32% expecting them to rise over the next 12 months, while 37% believe they will go down and 30% stating they will be unchanged.
Consumers were decidedly pessimistic about rate movements in spite of
While the response to this question is not included in the index, the Fannie Mae survey found that 71% of participants said they would buy a home if they were to move, up from 62% in December and 66% in January. The share of those that would rent fell to 28% from 31% the prior month and unchanged from one year prior.
