Confidence in the housing market dropped in March, but that doesn’t mean that there is low confidence in the market.
In fact, home buyers today have a more positive expectation of home buying than they did just a few months ago.
According to Fannie Mae’s Home Purchase Sentiment Index, surveyed home buyers had a sentiment rating of 84.5 percent, an incredibly high market. However, it comes off February’s record-breaking 88.3 percent confidence rating.
The drop in home buying sentiment is mostly due to the expected increase in the price of homes. The housing market has been one of the strongest parts of the economy for the past few years, and it’s forcing home prices higher.
This is good news for anybody that is looking to sell their home. But many homeowners aren’t selling, making it so there are even fewer homes available to purchase.
This is forcing home prices even higher.
Despite the rising cost of homes, there is still a high level of confidence in the housing market, particularly when it comes to buying a home.
About Fannie Mae’s Housing Index
Each month, Fannie Mae surveys 1,000 consumers about their opinions on the economy and the housing market. Six of the questions asked are used to produce Fannie Mae’s Home Purchase Sentiment Index the following month.
Because the Home Purchase Sentiment Index asks respondents about their future expectations, it is often seen as a gauge of how likely people are to purchase or sell homes in the next 12 months.
Most indicators tracked by Fannie Mae were positive last month, but they were all a bit lower than they were in February.
For example, there was a 70 percent positive response when it came to job concerns in the next 12 months. In February, there was a 78 percent positive response.
The change isn’t huge since the most current reading still indicates a strong expectation that people will keep their jobs, but it does show that confidence trended downward.
The downward trend shouldn’t be a huge concern, though. Even since Fannie Mae started tracking home purchase sentiment, the confidence in the market has been slowly rising.
But home prices are still expected to rise over the next 12 months, and those surveyed expect mortgage rates to rise as well.
The closer the busy summer buying season gets, the harder it may be to lock down a mortgage for a home.
Overall Sentiment Dropping
Most of the indicators might have dropped in March, but that doesn’t represent a poor sentiment about the housing market.
All the data shows is that people surveyed have a little less confidence in the next 12 months than they did last month.
Their reasoning for this can be anything – it might not even be tied to any factors related to the housing market.
One thing most the surveyed respondents did agree on is that home prices will rise.
For home buyers and homeowners, this can be seen as positive news. Homeownership has long been seen as an investment, and that still rings true today.
Those that own a house or are looking to buy one will be making an investment. At the rate that home prices are rising, that could pay off in a huge way.
Mortgage rates change every day, and the Home Purchase Sentiment Index expects them to rise over the next year. However, that doesn’t mean they’ll rise over the coming weeks.
Those who are interested in purchasing a home will want to check rates before they make any decisions.