Home purchase sentiment improved in November, driven by increases in the percentage of consumers who believe now is a good time to purchase a home as well as an increase in the percentage of those who believe home prices will rise over the next 12 months, according to Fannie Mae.
The share of consumers who believe now is a good time to sell a home decreased in November.
Fannie Mae’s Home Purchase Sentiment Index increased 2.7 points in November to 91.5 and is 5.3 points higher than a year ago. November’s increase comes after a slump the month earlier.
Sixty-one percent of Americans said November was a good time to buy a home, up from 57% the previous month. Just 29% said it was a bad time to buy a home, down significantly from 36% the month before.
The share of Americans who said it was a good time to sell a home decreased one percentage point in November, reaching 66%. About 26% of Americans said it was a bad time to sell a home, which is nearly unchanged from the prior month.
More Americans believe home prices will rise over the next year in November than in October, and fewer Americans said they believe home prices will decline. About 44% of Americans said home prices will rise over the next year—up from 41% in October.
Ten percent of Americans said home prices will decrease over the next year, which is down from 14% the prior month.
When it comes to mortgage rates, more Americans believe rates will hold steady over the next year than go up or down. About 44% said rates will remain about the same, up from 42% a month earlier.
The share of Americans who said rates will increase over the next year rose from 37% in October to 39% in November. Those who said rates will go down decreased slightly to 11% from 12%.
“While lower rates have helped boost housing affordability compared to last year, the HPSI has increased only moderately in that timeframe,” said Doug Duncan, SVP and Chief Economist, Fannie Mae. “This may be due in part to the ongoing challenge of tight housing supply, especially in the starter home market.”
In an environment of low supply, the recent mortgage rate decline has led to increased bid prices. The result is “home prices are propelled higher, mitigating the benefit of lower borrowing costs for many borrowers,” Duncan explained.
The percentage of Americans who believed it would be easy for them to get a mortgage loan today is 59%—both a monthly and annual increase from 57%.
Consumers are optimistic about the overall direction of the economy with 57% saying they think the economy is on the right track, compared to 33% who believe it is on the wrong track. Fifty-four percent of respondents said the economy was on the right track last month and 38% believing the economy was going in the wrong direction.
Sentiment toward incomes improved slightly in November. Just 10% of respondents said their income was lower than it was last year, 28% said it was higher, and 60% said it was about the same.
Overall, Fannie Mae found there is an increase in the rate Americans are saving, which “suggests that consumers could be growing more financially conservative,” Duncan said.
“Looking ahead, we continue to expect a steady but modest pace of growth in home