Homebuyer sentiment ticked up in December, slowly rebounding from the Fall lows. The latest Fannie Mae Home Purchase Sentiment Index jumped 3.7 points in December to 61.0. That remains only slightly above its all-time low set in October.
Year over year, the full index is down 13.2 points.
Only 21 percent of respondents believe it’s a good time to buy, while 76 percent of consumers say it’s a bad time to buy a home.
“In December, the HPSI inched upward slightly, as consumers reported increased expectations that mortgage rates and home prices may decrease over the next year—perhaps reflecting recently observed declines in mortgage rates and average home prices,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “However, the HPSI remains very low by historical standards, particularly the ‘good time to buy’ component, and respondents continue to cite high home prices and unfavorable mortgage rates as the primary reasons for their pessimism. As we enter 2023, we expect affordability to remain the top challenge for potential homebuyers, as even small declines in rates and home prices—from the perspective of the buyer—may not produce sufficient purchasing power. At the same time, existing homeowners may continue to wait to list their properties, since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable. We think the resulting tension will contribute to a continued decline in home sales in the coming months.”