US homebuyer confidence up in December; more see loan rates falling
Reuters
Published Jan 08, 2024 01:13PM ET
Updated Jan 08, 2024 02:06PM ET
By Amina Niasse
NEW YORK (Reuters) - U.S. homebuyer confidence improved in December, with more homeowners anticipating that mortgage rates would fall further this year, but it could take sometime for housing supply to recover as many remain hesitant to sell their homes.
Mortgage finance agency Fannie Mae said on Monday its Home Purchase Sentiment Index rose 2.9 points to 67.2 in December. It was up 6.2 points year-over-year.
"Notably, homeowners and higher-income groups reported greater rate optimism than renters; in fact, for the first time in our National Housing Survey's history, more homeowners, on net, believe mortgage rates will go down than go up," said Mark Palim, deputy chief economist at Fannie Mae.
The rate on the popular 30-year fixed-rate mortgage has plunged from a 23-year high of 7.79% in late October, tracking the decline in U.S. Treasury yields. It averaged 6.62% last week, according to data from mortgage finance agency Freddie Mac. Higher mortgage rates have discouraged homeowners locked into lower rates from selling their homes, shortening inventory and pushing existing home sales down precipitously since 2022.
"Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it's both a bad time to buy and sell a home, and so a more positive mortgage rate outlook may incent some to list their homes for sale, helping increase the supply of existing homes in the new year," said Palim.
The net share of respondents expecting mortgage rates to fall this year increased 22 points, but homeowners remain reluctant to list their homes. The net share of those saying it is a good time to sell fell 5 points, and the net share of those who believed it is a good time to buy rose 5 points.
"Like many others, even if rates fall further, we continue to believe that affordability will be tempered in part by elevated home prices, especially for first-time homebuyers, and we expect the pace of home sales improvement to be modest in 2024," said Palim.
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Written By: Reuters
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