Consumers appear to be feeling a bit skittish when it comes to mortgage rates, as the monthly Fannie Mae Home Purchase Index has declined for the first time since November. The index decreased 0.9 points in March to 71.9, due primarily to increased pessimism about the direction of mortgage rates.
Some 34 percent of consumers now believe that mortgage rates will go up over the next 12 months, up from 32 percent last month and more than the 29 percent who believe rates will decline.
Overall, though, the lack of housing affordability continues to weigh on consumers’ belief that it’s a “good time to buy” a home, with only 21 percent agreeing with that particular sentiment.
“The HPSI remained relatively flat in March, but we’re seeing signs that consumers may be adjusting their expectations for the housing market to better accommodate the higher mortgage rate and home price environment,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month. However, consumers took a slightly more pessimistic view on the likely direction of mortgage rates, likely reflecting the fact that actual mortgage rates have moved upward since the start of the year.
“With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year’s sharp jump in rates, an adjustment that we think could help further thaw the housing market,” Duncan continued.
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