Fannie Mae Archives

Survey Asks Americans About Housing Market

Fannie Mae’s monthly Home Purchase Sentiment Index tracks Americans’ feelings about buying and selling a home, prices, mortgage rates, household income, etc. In November, the survey saw its fourth consecutive monthly decline, though it remains up slightly from where it was at the same time last year. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says there was an uptick in consumer confidence and the number of respondents who said their income was higher than it was last year but, so close to an election, it’s hard to read too much into the results. “The November Home Purchase Sentiment Index outcome is difficult to interpret as the data collection period occurred across the presidential election timeline,” Duncan said. “The results are fairly evenly split between responses collected before and after the election, and there is evidence of an increase in consumer optimism in the immediate aftermath of the election. However, we caution readers against drawing conclusions about sustainable changes in consumer sentiment so soon after the election.” As an example, Duncan points to rising mortgage rates and how they could impact home purchase attitudes if sustained. However, because recent fluctuations in mortgage rates have been short lived, with rates returning to their prior position shortly after a spike, it may be too soon to say. In other words, Americans may feel uncertain but there isn’t yet reason to believe market conditions have fundamentally changed. More here.

What 1st-Time Home Buyers Need To Know Now

It’s normal to feel a little bit of stress when buying a house. Whether it’s financial worry or just the logistics of moving all of your belongings to a new home, there’s a lot to think about and plan for. This is especially true for first-time home buyers. That’s because first timers have never navigated their way through the home buying process before and may be feeling some added fear, confusion, and concern about handling the responsibilities of homeownership. So what should younger buyers be watching for if they’re planning on buying a home soon? Well, according to Fannie Mae’s chief economist, Doug Duncan, mortgage rates and inventory will be key to determining whether or not there are enough affordable, entry-level homes available for new buyers next year. “Demand from first-time buyers has increased with household formation and is outpacing supply, leading to significant price increases and affordability challenges for entry-level buyers,” Duncan said in Fannie Mae’s most recent Economic & Housing Outlook. “Home purchase affordability will be constrained further if the recent pickup in mortgage rates persists, which would present a downside risk to our forecast of housing and mortgage activity.” In other words, if mortgage rates continue rising and inventory remains low, first-time buyers should expect higher prices and more competition in the year ahead. More here.

More Americans Feel It’s A Good Time To Buy

Despite feeling more pessimistic overall, a recent survey of Americans found that an increasing number said now was a good time to buy a house. Fannie Mae’s Home Purchase Sentiment Index – which tracks consumer attitudes toward buying and selling a home, mortgage rates, wages, home prices, and more – saw a 2 percent increase in the number of respondents who said it was a good time to buy and a 4 percent bump in participants who said it was time to sell. Despite the improvement, the overall index fell for the third straight month. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says uncertainty is taking its toll. “The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March. Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today,” Duncan said. “Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate. Furthermore, consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index. However, this component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future.” More here.

Housing Outlooks Have Differing Visions

The housing market has been sort of a mixed bag this year. While home sales are expected to exceed last year’s levels and mortgage rates are still hovering near record lows, fewer houses for sale have presented potential home buyers in many markets with increased competition and higher prices. In short, you could look at the numbers and come to a couple of different conclusions. As an example, two recently released forecasts have differing views on what lies ahead for the residential real estate market. Fannie Mae’s Economic & Strategic Research Group’s October 2016 Economic and Housing Outlook sees housing momentum beginning to slow. Doug Duncan, Fannie Mae’s chief economist, says recent declines in sales, construction, and mortgage applications may mean continued weakness in the near term. However, Duncan also acknowledges the fact that improved demand from first-time home buyers is an encouraging sign. On the other side of the fence, Freddie Mac’s most recent forecast calls for continued gains and calls the housing market an economic bright spot. “As the economy sputters along a little bit faster than stall speed, the U.S. housing market continues to be a bright spot, though there’s less room to run than in the prior few years,” Sean Becketti, Freddie Mac’s chief economist, says. “We see new home sales improving some next year driven by increases in single-family housing construction which will push total home sales slightly higher.” More here.

Americans Expect Rates To Rise Next Year

With mortgage rates as low as they’ve been recently, it’s probably not surprising that a growing number of surveyed Americans say they don’t expect them to fall any further over the next 12 months. The survey – Fannie Mae’s monthly Home Purchase Sentiment Index, which tracks consumers’ attitudes toward buying and selling a home, prices, rates, household income, etc – found a 6 percent jump in the number of participants who felt rates would likely be higher next year at this time. Overall, Americans have been in a less optimistic mood since the survey hit its high in July. In fact, among the survey’s major components only the one asking if respondents’ household income is significantly higher than it was 12 months ago saw an increase. Doug Duncan, Fannie Mae’s chief economist, says low inventory, higher prices, and the upcoming presidential election may be causing uncertainty. “The decline in the HPSI over the past two months from the survey-high in July adds a note of caution to our moderately positive housing outlook,” Duncan said. “Downside changes came in particular from the HPSI components mortgage rate direction and good time to buy a house. In addition, the starter home tight supply and rising home prices as well as the unsettled political environment are likely giving many consumers a reason to pause or question their home purchase sentiment.” More here.

Hot Housing Market Will Continue In 2017

Forecasts from Fannie Mae, Freddie Mac, the National Association of Realtors, and the Mortgage Bankers Association all say that home sales should surpass this year’s totals in 2017. In fact, the forecasts call for somewhere between 6 million and 6.5 million homes to be sold next year. Part of the thinking behind the predictions has to do with the number of young Americans who are now reaching their prime home buying years. Because the number of first-time home buyers has been lower-than-normal recently, there should be growing pent-up demand among younger Americans, who will be eager to buy next year and beyond. Because of this, economists estimate that sales should continue to be strong over the next three years. That’s significant, especially if you’re a current homeowner who has been debating whether or not now is a good time to sell your home. It’s also important for potential buyers. Why? Because an influx of interested buyers could mean more competition and, if for-sale inventory stays low, higher prices. That means, prospective home buyers who are hoping to buy should start getting their finances in order now, so they’ll be able to put their best foot forward when the time comes. More here.

More Americans Say It’s A Good Time To Buy

According to Fannie Mae’s August 2016 Home Purchase Sentiment Index, the number of Americans who say it’s a good time to buy a house rose from the month before, marking three straight months of improvement. It’s a sign that an increasing number of potential buyers are feeling secure in their jobs, optimistic about their futures, and eager to take advantage of mortgage rates still near record lows. It also bodes well for the housing market as it nears the end of its busiest season. Overall, the survey found sentiment essentially flat from the month before, when it reached an all-time high. Doug Duncan, Fannie Mae’s senior vice president and chief economist, said Americans are optimistic heading into the fall. “Consumers have a fairly optimistic, 12-month outlook on housing at the end of the summer home-buying season, supported by increased job confidence and more favorable expectations regarding their personal financial situations compared with this time last year,” Duncan said. “The return to a slight upward trend in the HPSI during the spring and summer is, thus far, in line with our forecast, which calls for 4 percent growth in home sales in 2016 to the best level since 2006 and continued improvement for 2017.” More here.

Housing Market Conditions Mixed But Steady

Today’s housing market is a mixed bag. On the one hand, a better job market, improving wage growth and low mortgage rates have driven buyer demand higher and made an increasing number of Americans consider buying a house. On the other, too few homes for sale are driving prices upward and new home construction isn’t keeping pace with the increase in demand. Fortunately, in some cases, these factors help balance each other out. For example, though prices continue to rise in most markets, mortgage rates remain low – making higher prices slightly more manageable. All in all, Fannie Mae’s chief economist, Doug Duncan, says the real estate market isn’t likely to change too much one way or the other before the end of the year. “Housing market fundamentals remain a mixed bag. During the second quarter of 2016, both new and existing home sales rose to expansion highs, while single-family starts pulled back, remaining historically low for an expansion,” Duncan explained as part of the group’s most recent Economic and Housing Outlook. “Tight housing inventory from a lack of new construction continues to create affordability challenges, particularly at the lower end of the market … We expect home buyers will benefit from improving job and wage growth, more favorable lending standards, and continued low mortgage rates through the rest of the year.” More here.

Americans Say They Prefer Buying To Renting

Fannie Mae’s most recent Home Purchase Sentiment Index finds Americans feeling more optimistic about both the housing market and their income. In fact, the index set a new all-time high in July with each of the six components increasing from the month before. Perhaps most notably, the number of respondents who said they’d prefer to buy if they were going to move jumped to 67 percent, while the number who said they would rent set a new all-time low at 26 percent. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the trend is being led by younger Americans. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers,” Duncan said. “Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.” More here.

Housing Market Continues Down Familiar Path

The housing market has been fairly steady for quite a while now. Mortgage rates have stayed low while prices continue to rise. In many markets, there are too few homes available for sale – and though affordability conditions have been affected by increasing prices and tight inventory – an improved job market, low rates, and the growing number of Americans who say they want to buy a house have kept things moving forward. So what should you expect for the rest of this year? Well, according to Fannie Mae’s Economic and Strategic Research Group, more of the same. Doug Duncan, Fannie Mae’s chief economist, says they expect interest rates to remain low through next year helping to support continued gains for the real-estate market. “We still expect moderate housing expansion for 2016. While new home sales have pulled back from their expansion-best, existing home sales rose to the highest level in more than nine years amid the largest year-over-year drop in for-sale inventory since October of 2015,” Duncan said. “Without relief from new construction, housing inventory will likely remain tight, boosting home prices and constraining affordability.” In other words, the housing market should continue to see gains, though they will remain gradual until new home construction picks up and prices begin to moderate. More here.