Home buyer sentiment in January largely remained sour, according to a new
survey, despite early signs of a pickup in the housing market.
Fannie Mae’s National Housing Survey, which gauges consumer attitudes on buying and selling homes, inched up in January, to an index reading of 61.6%, from 61% in December. Despite the month-over-month increase, January’s reading was roughly 10 points below the same month in 2022. The index, though, has improved in recent months since hitting a low of 56.7 in October 2022.
Yet 82% of those in the January survey said it was a bad time to buy a home—a new high in the data dating back to June 2010. Seventeen percent said it was a good time to buy, down from the 21% who responded similarly in December, while 1% said they were undecided.
Spirits were higher when it came to the prospects for selling a home, with 59% of respondents saying now was a good time to sell—an increase from 51% in December.
Housing costs are one explanation. Consumers “continue to indicate that high home prices and high mortgage rates make it a ‘bad time to buy’ a home,” Fannie Mae Chief Economist Doug Duncan said in a release. That’s despite a recent drop in mortgage rates from 2022’s highs.
Weekly 30-year fixed mortgage rates in January were as high as 6.48%, and as low as 6.09%, according to Freddie Mac’s recurring survey—more than half a percentage point below 2022’s 7.08% peak. A majority of respondents to Fannie Mae’s survey said they expect mortgage rates to gain, according to the results. Of those surveyed, 52% said mortgage rates would increase, compared with 13% who said rates would fall, and 33% who said they would stay the same.
Rising rates weighed on home prices in late 2022, S&P CoreLogic Case-Shiller home price Indices and other data show. According to weekly data from
the trend looks to have continued into 2023: the median home in metropolitan areas in which the brokerage operates sold for $347,000 in the four weeks ended Jan. 29, a gain of 0.8% from the same period last year.
Consumers expect home prices to cool further, Fannie Mae’s survey shows. While respondents were split as to whether prices would increase, decline, or stay the same over the next 12 months, the largest group—37%—said prices would fall. They expect home prices to decrease an average 1.4% over the next 12 months, according to the data. The same can’t be said for rents: a 6.8% increase in rental prices over the next 12 months is anticipated.
The expectation that home prices over the next year will fall or remain flat “may incentivize some potential home buyers to delay their purchase decision,” Duncan said. “Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months.”
The survey results add to a mixed picture for housing. The volume of home purchase loan applications gained in mid-January before falling at the end of the month, according to Mortgage Bankers Association data. In the four weeks ending Jan. 29, pending sales measured by Redfin fell 23% from a year prior—the smallest such decline since September, the brokerage said.
“We expect more home buyers and sellers to gradually return to the market by springtime, but mixed economic news and mixed reactions from the market mean the recovery will be uneven,” Chen Zhao, Redfin’s economics research lead, said in an early February release.
Coming housing market data will help paint a clearer picture. The National Association of Home Builders will release its gauge of builder confidence on Feb. 15—one day before the Census Bureau and HUD jointly release January’s housing starts and permits data. The National Association of Realtors’ existing-home sale data for January, which is expected on Feb. 21, will offer a read on the market for previously-owned homes.
Write to Shaina Mishkin at email@example.com