Overall attitudes toward housing varied at the close of 2016, with more believing now is a good time to buy a home, but less believing mortgage rates will fall in the year ahead, according to Fannie Mae’s Home Purchase Sentiment Index® (HPSI) for December. The Index, which comprises six components, declined to 80.7—movement that, according to Fannie Mae Chief Economist Doug Duncan, could be the result of the sudden surge in mortgage rates.
“Despite the post-election bump in general consumer attitudes, a rapid rise in mortgage rate expectations has tamped down home purchase sentiment, at least in the near term,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “A spike in economic optimism in the immediate aftermath of an election is typical. Whether consumers will sustain this level of optimism into 2017 remains unclear. The spike in interest rates reflects, in part, the market’s anticipation of pro-growth policies from the incoming administration; if this optimism comes to fruition, it should translate into stronger income growth and increased job security for consumers—the two HPSI components that could help support housing sentiment this year.”
Month-over-month, the amount of Americans who said it is “a good time to buy a house” increased two points to 32 percent; the amount who said it is “a good time to sell” remained unchanged at 13 percent, as well as the amount who said it is “a bad time to sell,” at 38 percent. The amount of Americans who said home prices will go up also remained unchanged, at 35 percent.
The amount of Americans who said mortgage rates will go down in the next year, however, decreased four points to -55 percent. Average rates shot up above 4 percent for the first time since 2015 in November of last year, and despite cooling off last week, remain above 4 percent.
Source: Fannie Mae
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