Households May Finally Be Adjusting to Higher Mortgage Rates

By klrw460 April 8, 2024

In Washington, DC, the Fannie Mae Home Purchase Sentiment Index (HPSI) saw a slight decline of 0.9 points in March, settling at 71.9. This marks the first drop since November 2023, mainly due to growing concerns about future mortgage rates. Now, 34% of consumers anticipate an increase in mortgage rates over the next year, compared to 32% last month. Despite this concern, sentiments on the conditions for buying and selling homes have slightly improved, continuing a trend from previous months. However, overall housing affordability issues still dampen the enthusiasm for buying homes, with only 21% considering it a good time to buy.

Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, noted that while the HPSI was relatively stable in March, there is a noticeable shift in consumer expectations adjusting to the current higher rates and home prices. He mentioned a slight uptick in the perspectives on buying and selling homes. Nevertheless, the expectation for rising mortgage rates has become more prevalent, reflecting recent rate increases. Duncan added that with the pandemic’s low rates now in the past, more households might overcome previous rate increases, potentially revitalizing the market. He anticipates a gradual rise in home listings and transactions in the upcoming year, driven by both rate changes and other personal factors influencing housing decisions.

Key points from the HPSI include:

  • A slight increase in those seeing it as a good time to buy (21%) and sell (66%).
  • Home price expectations slightly declined, with 40% predicting increases, down 2% from before.
  • Expectations for lowering mortgage rates fell to 29%, with more people foreseeing stable or rising rates.
  • Concerns over job security grew marginally, with 23% worried about potential job loss in the next year.
  • Household income levels largely remained stable, with minor shifts reported.

The Home Purchase Sentiment Index encapsulates consumer sentiment regarding the housing market, derived from Fannie Mae’s comprehensive National Housing Survey. This survey assesses the public’s attitudes on housing, the economy, and personal finances.

For further details on the survey findings and insights into housing market trends, visit the Surveys section on the Fannie Mae website.

For more information, read the original press release from: