Fannie Mae survey shows consumers remain concerned about factors, including the outlook for home price declines, mortgage rates and access to mortgage credit.

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A monthly survey by Fannie Mae shows homebuyer sentiment ticked up slightly in November for the first time in nine months but remained near an all-time low as consumers stayed concerned about factors, including the outlook for home price declines, mortgage rates and access to mortgage credit.

Fannie Mae’s Home Purchase Sentiment Index inched up 0.6 points in November to 57.3. That’s up from a record low of 56.7 registered in October but down 17.4 points from a year ago.

Doug Duncan

“Consumers continue to expect mortgage rates to rise but home prices to decline, a situation that we believe will contribute to a further slowing of home sales in the coming months, as both homebuyers and home-sellers have reason for apprehension,” Fannie Mae Chief Economist Doug Duncan said in a statement Wednesday. “We expect mortgage demand to continue to be curtailed by affordability constraints, while homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”

Source: Fannie Mae National Housing Survey

Fannie Mae has compiled the Home Purchase Sentiment Index (HPSI) since 2011, distilling six questions from its monthly National Housing Survey of 1,000 homeowners and renters into a single number. Questions that are factored into the HPSI include whether consumers think it’s a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs and whether their incomes are higher than they were a year ago.

While four of the six components tracked by the HPSI improved from October to November, the survey results reflect slightly less consumer pessimism, rather than optimism, about the outlook over the next 12 months.

Source: Fannie Mae National Housing Survey

More than one-third (34 percent) of consumers surveyed by Fannie Mae in November said they expect home prices will go down in the next 12 months. That’s an improvement from the record high 37 percent who said they expected price declines in October. But the net share of consumers who expect home prices to appreciate in the next year remains in negative territory as it was at the outset of the pandemic.

Source: Fannie Mae National Housing Survey

Demand for purchase mortgages has firmed in recent weeks as mortgage rates retreat from 2022 highs, according to recent surveys by the Mortgage Bankers Association. Forecasters at Fannie Mae and the Mortgage Bankers Association expect mortgage rates will ease next year. While most consumers are still bracing for mortgage rates to keep rising, more are coming around to the idea that rates may have peaked.

While 62 percent of consumers surveyed by Fannie Mae in November think rates will go up over the next 12 months, that’s down from 65 percent in October. And the percentage of consumers who expect mortgage rates will go down in the next 12 months increased from 6 percent to 10 percent.

With 24 percent expecting mortgage rates to remain unchanged, the net share of those who expected mortgage rates to go down over the next 12 months increased by 7 percentage points from October to November.

Source: Fannie Mae National Housing Survey

While not a component of the HPSI, another key indicator from the National Housing Survey is the share of consumers who say it would be easy or difficult to get a mortgage.

The share of consumers who said it would be difficult to get a mortgage increased 4 percentage points in November to 51 percent. The share of consumers who say getting a mortgage would be easy decreased 2 percentage points from October to November to 45 percent.

Source: Fannie Mae National Housing Survey

The percentage of respondents who say it is a good time to buy a home remained unchanged at 16 percent, tying last month’s all-time survey low. But the percentage who said it’s a bad time to buy decreased by 1 percentage point to 79 percent.

Source: Fannie Mae National Housing Survey

Consumers were slightly more optimistic about selling conditions in November, with 54 percent of those surveyed saying it was a good time to sell, up from 51 percent in October. The percentage who said it’s a bad time to sell decreased from 42 percent to 39 percent.

“Both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated,” Duncan said.

The only component of the HPSI that declined from October to November was the share of consumers worried about losing their jobs.

The share of employed consumers who said they were concerned about losing their jobs ticked up from 15 percent in October to 21 percent in November. The percentage who said they were not concerned about being unemployed declined from 85 percent to 78 percent over the same period.

The final HPSI component — change in household income over the last 12 months — remained unchanged from October.

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Email Matt Carter

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