Homebuyer Sentiment Rising
The latest monthly forecast (August 2021) by Fannie Mae’s National Housing Survey (August 2021), found that the net share of Americans who think it’s a good time to buy a home rose in August for the first time since March. When one considers concerns about the Delta variant and rapidly rising inflation, this is indeed a pleasant surprise. A large share of prospective buyers believe that rapidly rising home prices will stabilize in the near term, making homebuying more affordable to more consumers. Adding to the enthusiasm is the belief by many respondents that mortgage rates will soon rise. Apparently, homebuyers believe buying in the near term will allow them to obtain a lower mortgage rate, while waiting runs the risk of higher rates, and therefore, higher monthly mortgage payments.
Those who thought it is now a good time to sell dropped by just 1 percent in August, compared to the July survey when selling sentiment dropped by 2 percent. This trendline is moving in the right direction. It’s also important to keep in mind that year over year, seller sentiment has risen 1.6%. The net share of consumers who thought home prices will rise in the next 12 months dropped by 9 percentage points. This should be reflected in more home sales. Indeed, the combination of low mortgage rates and expectations of lower prices going forward is a potent mix which will yield increased activity in the housing market.
Tempering enthusiasm somewhat in the forecast is that 15% of respondents expressed concern about losing their job in the next twelve months. This represents a 2% increase from July. But recent reports of a weakening pandemic in the U.S., could bode well in the next survey, adding another impetus to the housing market
The bottom line: More homebuyers are starting to think that home prices have largely topped out, but also that mortgage rates will rise. Therefore, if they still hope to snag a low interest rate, it’s time to shop for a home.
Because of these new variables (Covid, rising inflation, interest rate expectations, rising energy costs, etc.), the market is more complex today than at any time in the recent past.
I’m happy to share my thoughts and the results of my research to help potential buyers and sellers navigate this increasingly complex labyrinth.