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Consumers are (slightly) more optimistic about buying a home 

Bucking industry trends, consumer sentiment is at the highest level in more than two years, according to Fannie Mae’s latest survey.

July 8, 2024
3 minutes

The industry may be feeling a bit glum about the current real estate market, but consumer optimism could be on the upswing. 

The Fannie Mae Home Purchase Sentiment Index was 72.6 in June, up 3.2 points compared to a month ago and at the highest level in more than two years. The share of those who think it is a good time to buy and and a good time to sell both increased, although the good-time-to-buy share is still only 19%.

It's an improvement from May, however, when that share hit an all-time low of just 14%.

Sentiment up, but it's all relative: The June index was higher compared to recent years but remains well below pre-pandemic levels. The index reached a 13-year low point in the fall of 2022, dipping below 60. The high point was in the summer of 2019, at 91.5.

While up overall, this month's sentiment index had plenty of mixed messages from consumers, who still expect home prices and mortgage rates to rise in the next 12 months. That was balanced by a growing sense of job security, however, suggesting consumers might be feeling more comfortable with the idea of buying a home.

"Affordability concerns remain the primary driver of consumer housing sentiment, even as the topline findings from our monthly survey showed a modest uptick in optimism on both homebuying and home-selling conditions," said Mark Palim, Fannie Mae's deputy chief economist. 

Taken together, Palim believes there is little upside to overall sentiment until there is meaningful progress on affordability — "most likely in the form of either lower rates or improved supply."

Industry sentiment moving in the other direction: While consumers appear to be feeling a little more positive about housing, the industry is less encouraged. Builder confidence is steadily declining, falling to 43 in June according to the National Association of Home Builders.

And the latest confidence index from the National Association of Realtors found that real estate professionals are feeling less optimistic that buyer traffic will increase year-over-year in the next three months.

Rate predictions less rosy: With mortgage rates, however, it's a different story — industry economists generally expect mortgage rates to start going down later this year, but consumers are not convinced. 

Fannie Mae reported that 33% of those surveyed expect rates to rise in the next 12 months, while 24% expect them to fall. Six months ago, more consumers expected rates to go down than up, but that flipped this spring when it became clear the Federal Reserve wasn't ready to cut interest rates.

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