A young woman is worried looking at her laptop.

Optimism about buying a home hits an all-time low 

Even with mortgage rates dropping, challenges like affordability and stagnating household finances are keeping consumers wary.

December 7, 2023
2 minutes

Mortgage interest rates may be falling — but so is consumer sentiment. According to the latest survey from Fannie Mae, consumers are more pessimistic than ever about buying a home.

The details: The Fannie Mae Home Purchase Sentiment Index dropped in November, with only 14% of consumers indicating that it's a good time to buy a home. That percentage is the lowest ever for the index.

Enthusiasm for selling a home is also deteriorating. The percentage of survey respondents who believe it's a good time to sell a home was 60%, down from 63% in the summer and 65% in the spring.

The overall index number came in at 64.3, down 0.6 points from October but still up from the lows of last fall, following the steady rise in interest rates in 2022. 

Expectations: Many consumers surveyed expect mortgage rates to either stay elevated or continue to rise in the next 12 months, said Doug Duncan, Fannie Mae's chief economist — despite many economist predictions that rates will fall (at least slightly). The survey also noted that 76% of consumers believe the economy is on the wrong track, up from 48% three years ago. 

Duncan attributed the overall low sentiment to a combination of housing affordability challenges and a declining sense of financial security. He noted that even if mortgage rates keep falling, affordability — and what he characterized as "persistent consumer pessimism" — is unlikely to improve meaningfully anytime soon.

"The lack of housing inventory is likely to remain a challenge for some time, and home purchase sentiment may continue to be suppressed as a result," Duncan said, adding that Fannie Mae researchers expect it will be a couple of years before home sales return to pre-pandemic levels.

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