From Time:

A recent survey shows that Americans’ sentiment about buying a home is at its highest in two years. The percentage of respondents who expect mortgage rates to decline over the next year is the highest on record and has increased from the previous month. However, this optimism doesn’t extend to housing affordability forecasts for the year.

In January, Fannie Mae’s Home Purchase Sentiment Index showed an increase due to improvements in consumers’ sense of job security and mortgage rate optimism. A record-high 36% of respondents anticipate mortgage rates to fall in the next 12 months, signaling growing confidence in the housing market.

Federal Reserve officials’ intimation that interest rates will likely be cut three times in 2024 has contributed to the increasing optimism about mortgage rates. This has led to small declines in rates in recent weeks. The average 30-year fixed-rate mortgage decreased .06 percentage points to 6.63% for the week ending Feb. 1.

While sentiments about mortgage rates have improved, consumer confidence about the housing market overall is still low. Only 17% of respondents believe it’s a good time to buy a house, and 83% say it’s a bad time. Home price forecasts have also dipped slightly, with fewer respondents expecting prices to increase.

According to Doug Duncan, Fannie Mae’s chief economist, affordability will still be a significant barrier to homeownership for many households this year. With high interest rates and record-high home prices, market activity slowed down in 2023, causing inventory to dwindle nationally. Although more homes are hitting the market this year, it’s still not enough to improve conditions for homebuyers.

The main reason behind the low affordability levels is the insufficient increase in housing supply. Until this issue is addressed, affordability will continue to be a major challenge for many households looking to purchase homes.



Read more: Will Mortgage Rates Fall Soon? 36% of Americans Think So