As mortgage rates drop, home buying affordability continues to grow. More consumers in the market believe that now is the right time to buy a home. Learn more on why buyers are optimistic this spring home buying season in this HousingWire article by Alcynna Lloyd.
As the housing market continues to shift in favor of homebuyers, data indicates that many Americans believe now is a good time to buy, according to Fannie Mae’s latest Home Purchase Sentiment Index.
According to the GSE’s report, sentiment spiked 5.5 points in March to 89.8. Not only does this reverse last month’s slight decline, but it also marks the highest climb since June 2018.
“A brighter housing market outlook drove this month’s increase in the HPSI – a welcome sign from consumers as we enter the spring and summer home-buying seasons,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said. “The results further corroborate the positive effect of falling mortgage rates on affordability, which we expect will help support a rebound in home sales.”
Duncan may be right, as Fannie’s index reveals increases in the “Good Time to Buy” and “Good Time to Sell” components drove the measure of consumer sentiment higher, rising by 7 and 13 percentage points, respectively.
Complementing that rise, more consumers said they now expect interest rates to fall within the next 12 months, as that component rose 7 percentage points in March alone, the report notes.
Overall, the rise of affordability paired with positive contributions from the job sector are now projected to drive housing demand even further.
“Continuing a five-month trend, the net share of consumers who believe mortgage rates will go down increased 7 percentage points amid a 35 basis-point drop in mortgage rates in March alone,” Duncan said. “Meanwhile, job confidence – little changed from last month’s survey high – also continues to support housing sentiment, while income growth perceptions firmed from both prior month and year-ago levels, potentially supporting an uptick in housing demand.”
NOTE: Fannie Mae’s Home Purchase Sentiment Index is constructed from six questions, gauging the current views and forward-looking expectations of consumers navigating the housing market.