Consumer Confidence in the Housing Market Increased in September

According to Fannie Mae’s Home Purchase Sentiment Index (HPSI), consumer confidence in the housing market increased in September, reaching its highest level in two years with an index score of 73.9.

In September, 42% of consumers anticipated that mortgage rates would decline over the next 12 months, up from 39% in August and 24% in June. However, many consumers also believe that housing prices will rise in the coming year, potentially offsetting some improvements in affordability that lower mortgage rates might bring.

The proportion of survey respondents who view it as a good time to buy a home rose by 19% in September compared to August. Meanwhile, the percentage of those who feel it is a bad time to buy decreased slightly from 83% to 81%. In contrast, the percentage of respondents who think it is a good time to sell a home (65%) remained steady from August, while those who view it as a bad time to sell increased by 1 percentage point to 35%.

Mark Palim, Fannie Mae’s Senior Vice President and Chief Economist, noted, “While many consumers still think it’s a bad time to buy a home, the recent shift in attitudes toward mortgage rates is boosting overall housing sentiment. More people are now citing high home prices as the main barrier to affordability instead of high mortgage rates. Although optimism about falling mortgage rates has driven the HPSI to a 30-month high, we have yet to see this translate into a significant uptick in home sales activity. Existing home sales are on track to reach their lowest annual total since 1995, indicating that while consumers are aware of the easing interest rate environment, they are still concerned about the significant increase in home prices over the past four years.”

Palim also highlighted a notable trend among renters, who are often first-time homebuyers. The share of renters who believe it’s a good time to buy a home has increased from 13% to 20% over the past three months, and those expecting mortgage rates to fall rose from 16% to 30%. While these figures remain relatively low, the improvement may suggest that potential homebuyers who have been waiting for lower mortgage rates might soon consider entering the market, despite ongoing concerns about high home prices.