Couple hugging staring at house

Consumer confidence in homebuying moves up slightly 

Fannie Mae’s Home Purchase Sentiment Index edged higher with more consumers saying it is a good time to buy a house.

January 9, 2023
2 minutes

Key points:

  • The index crept up by 3.7 points in December from the previous month.
  • Year over year, the index remains at near-historic lows.
  • Consumers expressed more confidence in homebuying, the outlook for lending costs and employment.

Consumer confidence in homebuying nudged higher in December but was still below the previous year's figure — and only slightly better than record lows set in October and November, Fannie Mae reported Monday.

The Home Purchase Sentiment Index increased by 3.7 points from November. Three of the criteria from the national housing survey showed month-over-month improvement: homebuying conditions, the outlook for mortgage rates and employment. Year over year, the index is down more than 13 points from 2021.

  • Twenty-one percent of respondents said it is a good time to buy a home, up from 16% in October and November, according to Fannie Mae.

  • A growing number of consumers believe home prices will drop and mortgage rates will decline over the next year, the survey showed. Higher costs for mortgages have sidelined both buyers and sellers, economists say.

  • Respondents who said they are not concerned about losing their job increased from 78% to 82%, Fannie Mae reported.

The national index looks at consumer views and expectations of the housing market. The survey asks consumers whether they think it is a good time to buy a house and in which direction they think home prices and mortgage rates will trend. The survey also asks general questions about income and employment status and expectations.

"As we enter 2023, we expect affordability to remain the top challenge for potential homebuyers, as even small declines in rates and home prices — from the perspective of the buyer — may not produce sufficient purchasing power," said Doug Duncan, chief economist and senior vice president at Fannie Mae. 

"Existing homeowners may continue to wait to list their properties, since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable," Duncan said. 

Fannie Mae is projecting "a continued decline in home sales," at least for the first few months of 2023, as the Federal Reserve has continued to raise interest rates to rein in inflation. 

"The [index] remains very low by historical standards, particularly the 'good time to buy' component, and respondents continue to cite high home prices and unfavorable mortgage rates as the primary reasons for their pessimism," Duncan said.

Get the latest real estate news delivered to your inbox.