Published by REALTOR.com | May 8, 2023
Consumers expect mortgage rates to drop, so they’re feeling a lot more optimistic about the housing market, according to a recent Fannie Mae poll.
After the U.S. Federal Reserve’s rate increase last week, the Fed Chair signaled a potential pause in hikes. Rates dipped after the news, and economists are expecting mortgage rates to gradually decline over the course of this year, and into 2024.
Consumers see this as a good sign for mortgage rates. The monthly Fannie Mae Home Purchase Sentiment Index rose in April to the highest level since May 2022.
In April, 22% of consumers polled said they expect rates to go down, compared to just 12% last month.
The increase in overall home-buying sentiment is “primarily driven by consumers’ more optimistic mortgage rate expectations,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a statement.
People believe mortgage rates will fall over the next year, which “could be due to a combination of factors,” Duncan said, “including an awareness of decelerating inflation, market suggestions that monetary conditions will ease in the not-too-distant future, and, of course, actual mortgage rate declines during the month.”
The share of respondents who said it’s a good time to buy a home rose to 23% in April, from 20% the previous month.
But would-be buyers are still frustrated by how expensive it is to buy a home. Many respondents said they expect home prices to go up in the next 12 months. The share of those who believe in rising home prices was 37% in April, up from 32% the previous month.