Fannie Mae: Consumers Feeling Better About Housing Despite High Home Prices

(Illustration courtesy of Fannie Mae)

Fannie Mae, Washington, D.C., said its Home Purchase Sentiment Index increased 0.7 points in October to 74.6, pushing the measure of consumer confidence to its highest level since February 2022.

The index is bouncing back from its record low in 2022.

The share of consumers who think it’s a good time to buy a home increased to 20% in October, while the share who think it’s a good time to sell a home declined to 64%, the report said. “On net, consumers continue to expect home prices to rise and mortgage rates to fall, with the latter component hitting another survey high this month.”

Fannie Mae Senior Vice President and Chief Economist Mark Palim noted significant improvement in overall housing sentiment over the past two years, but said consumers’ perception of homebuying conditions remains strained, primarily due to high house prices. “In fact, the share citing mortgage rates as the primary driver of their homebuying pessimism declined again this month; however, since the fielding of the survey primarily in the first half of October, mortgage rates moved sharply higher, which may serve to suppress some of the recently observed rate optimism,” he said. “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.”

Palim said he expects rent growth to remain modest in 2025 and said more consumers may be seeking – and finding – attractive deals in the rental market “as they continue saving toward a future home purchase.”