Consumers are more confident about the housing market than they’ve been in two years, with many expecting mortgage rates to fall in the next 12 months.
The Fannie Mae Home Purchase Sentiment Index rose 1.8 points in September to 73.9, its highest reading in more than two years, according to data released Monday. The index is up more than 9 points from the same period a year ago.
A record 42% of survey respondents expect mortgage rates to fall in the next 12 months, up from 39% a month earlier. Even so, only 19% think it’s a good time to buy a home now, near all-time lows.
"Although most consumers continue to think it’s a 'bad time' to buy a home, the recent shift in attitude toward mortgage rates is pushing overall housing sentiment higher, and a growing share are now pointing to high home prices rather than high mortgage rates as the primary sticking point for affordability," Mark Palim, Fannie Mae’s senior vice president and chief economist, said in a statement.
Sixty-five percent of survey respondents think now is a good time to sell a home. And 39% expect home prices to go up in the next 12 months, up from 37% a month earlier.
While consumers feel optimistic that mortgage rates will go lower, they’ve been drifting higher in recent days. A strong jobs reporton Friday strengthened the case for smaller interest rate cuts from the Federal Reserve for the remainder of the year, pushing mortgage rates and the Treasury yields that underpin them higher.
Read more: How the Federal Reserve rate decision affects mortgage rates
The average interest rate on a 30-year mortgage was 6.53% on Friday, according to Mortgage News Daily. That’s up from Freddie Mac’s weekly average of 6.12% released on Thursday.
The Fannie Mae index uses questions from the National Housing Survey, a poll of more than 1,000 household financial decision-makers conducted from Sept. 1 to Sept. 18.
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