Fannie Mae recently released its monthly Home Purchase Sentiment Index, which found that homebuyer sentiment was at an all-time low after declining for eight months in a row. The index has gathered monthly homebuyer sentiment data since 2011.
According to the index, only 16% of homebuyers believe that now is a good time to buy a house, while 51% say it is a good time to sell. Doug Duncan, Fannie Mae’s Senior Vice President and Chief Economist, explained the survey’s findings in a press release.
“Amid persistently high home prices and unfavorable mortgage rates, the ‘bad time to buy’ component increased to a new survey high this month, while the ‘good time to sell’ component continued its downward trend,” according to Duncan. “Consumers also remain concerned about the movement of home prices – expectations that prices will decrease reached a new survey high, particularly among homeowners.”
According to Duncan, low homebuyer sentiment will put a further drag on home sales. This is bad news for the real estate industry, which has already experienced mass layoffs in recent months.
“As continued affordability constraints reduce homebuyer demand, and homeowners become reluctant to sell at potentially reduced prices, we expect home sales to slow even further in the coming months, consistent with our forecast,” Duncan explained.
In addition to expensive home prices, high-interest rates are also the main concern. Almost 40% of survey respondents expect mortgage rates to increase from current levels. According to Freddie Mac, the current 30-year fixed-rate mortgage rate is 7.08%. Experts don’t expect mortgage rates to dip significantly for the foreseeable future.
Is Now a Good Time to Buy a Home?
Homebuyer sentiment is low for a reason, and many potential homebuyers are cautious about participating in the real estate market. However, individuals and families who need to move or are otherwise in the market for a new home may not want to wait to enter the market.
Anyone who is waiting for mortgage rates to come down before buying is out of luck. While mortgage rates are high, there is no indication that they will come down to earth any time soon. Additionally, buyers who take out a loan with current interest rates can have the option of refinancing later at a lower rate.
On top of that, home prices are falling due to reduced competition and demand. While it may take a while for buyers to find a home within their budget, it’s possible to purchase a home under the asking price in today’s less competitive market. Overall, buyers ready to purchase a home should consider moving forward to secure a current interest rate but should only move forward with homes that fit their budget. Homebuyers can proceed patiently in current conditions.