Fannie Mae Reports Housing Sentiment Finishes 2024 Higher

(Illustration courtesy of Fannie Mae)

Fannie Mae’s Home Purchase Sentiment Index decreased 1.9 points in December to 73.1 but remained substantially higher than year-ago levels due in part to ongoing mortgage rate optimism.

Many consumers continue to expect mortgage rates will decline over the next 12 months, the report said; while December’s 42% share was lower than November’s 45%, it remains meaningfully improved compared to December 2023’s 31%.

Likewise, the share of those expressing optimism toward homebuying and home-selling conditions declined slightly month over month, but both components remain up year over year.

Overall, the HPSI is up 5.9 points compared to this time last year, Fannie Mae reported.

“Even though the HPSI fell to end the year, consumer sentiment toward the housing market finished 2024 substantially above year-ago levels, attributable in part to respondents’ ongoing expectations that mortgage rates will decline,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “However, just over one in five consumers believes it is a ‘good time’ to buy a home – although that share has risen over the last year, too, after reaching an all-time low of 14% in Q4 2023.”

Palim noted some respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, but said the upward trend in homebuying sentiment in 2024 may reflect a “slow acclimatization” to the generally less-affordable market conditions. “…We expect a modest decline in mortgage rates, decelerating home price growth, and higher wage growth to improve the relative affordability of purchasing a home in the new year, though consumers’ experiences will likely differ depending on where they live,” he said. “As such, we think home purchase opportunities will still require market savviness by would-be homebuyers in what is expected to remain, broadly speaking, a highly competitive housing market.”