Personal Finance News
Homebuyer Sentiment Continued Upward Swing in October
Despite home prices remaining high, consumer sentiment on the housing market continued to climb last month.
About the index increase:
The latest update to Fannie Mae’s Home Purchase Sentiment Index (HPSI) saw another increase. Specifically, the index rose 0.7 points in October 2024, hitting 74.6. This marks the highest point for the index since February 2022 and is up more than seven points since the end of last year. Moreover, year over year, the index has risen 9.7 points.
Contributing to the rise, the number of consumers who agreed that now is a good time to purchase a home increased to 20%. Meanwhile, the number of respondents who said it was a good time to sell fell to 64%.
Elsewhere, the index also asked consumers about mortgage rate expectations. In October, 39% of respondents said they believed rates would go down within the next 12 months. Interestingly, that figure is down from 42% in September. At the same time, the percentage of people who thought that rates would rise also decreased month over month, going from 27% to 22%.
Lastly, looking outside of the housing market itself, the index inquired about job loss concerns. This time around, 79% of respondents said they were not concerned about losing their job in the next 12 months. That’s up two percentage points from last month.
What they’re saying:
Commenting on October’s index results, Fannie Mae SVP and Chief Economist Mark Palim said, “While we have seen significant improvement in overall housing sentiment over the past two years, consumers’ perception of homebuying conditions remains strained, with only 20% believing it a ‘good time’ to buy a home, primarily due to high home prices. In fact, the share citing mortgage rates as the primary driver of their homebuying pessimism declined again this month.”
Palim added, “One effect of the prolonged period of relatively high home prices of the past four years is that we are seeing a slowly growing preference to rent rather than buy on consumers’ next move. With rent growth expected to remain modest in 2025, more consumers may be seeking – and finding – attractive deals in the rental market as they continue saving toward a future home purchase.”
My thoughts:
With mortgage rates continuing to dip down, it makes sense that consumers would be feeling better about their homebuying prospects. Moreover, seeing as the Fed just cut rates again yesterday, it’s likely that we’ll see mortgage rates continue to fall. That said, the housing market is complicated, so those falling rates could easily be offset by increasing prices.
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