Study: Consumers’ Homebuying Optimism Bounces Back Up

December 10, 2019

Fannie Mae’s Home Purchase Sentiment Index rebounded in November, nearing a survey high that was set in August as more Americans show greater confidence in home buying. The index, based on consumer surveys, showed the greatest increases in the percentage of Americans who believe now is a good time to buy and those who believe home prices will continue to rise over the next 12 months.

“Over the past year, a growing share of consumers say that they expect mortgage rates to remain steady,” says Doug Duncan, Fannie Mae’s chief economist and senior vice president. “While low rates have helped boost housing affordability compared to last year, the [index] has increased only moderately in that time frame. This may be due in part to the ongoing challenge of tight housing supply, especially in the starter home market.”

With recent mortgage rate declines, home buyers can increase what they pay for homes while still holding their payment size constant, Duncan says. “As a result, home prices are propelled higher, mitigating the benefit of lower borrowing costs for many borrowers,” he adds. “Additionally, a rising savings rate suggests that consumers could be growing more financially conservative. Looking ahead, we continue to expect a steady but modest pace of growth in home purchase activity.”

Here’s a closer look at Fannie Mae’s Home Purchase Sentiment Index results for November:

  • 61%: the percentage of Americans who say now is a good time to buy (up from 57% in October) and the highest level since March 2018. Meanwhile, 29% of Americans said now is a bad time to buy, which is down from 36%.
  • 66%: the percentage of Americans who say it is a good time to sell (down slightly from 67% in October).
  • 44%: The percentage of Americans who say home prices will rise in the next 12 months, up from 41% the month prior. The percentage who say home prices will decline was 10% and those that believed prices will stay the same was 40%.
  • 11%: The percentage of Americans who say mortgage rates will go down in the next 12 months, down from 12% the month prior. Thirty-nine percent of Americans believe mortgage rates will rise.
  • 86%: The percentage of Americans who say they’re not concerned about losing their job over the next 12 months.
  • 28%: The percentage of Americans who say their household income is significantly higher than it was 12 months ago; 10% say their household income is significantly lower.
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