While there is still a seller’s market for housing, home buyers are starting to have a more positive outlook for the next year.
In June, the overall sentiment for buying a home rose to 88.3, tied for the highest recording every.
Last time the sentiment was this high was back in February of this year.
The rising sentiment for buying a home was bolstered by the increase in respondents that believe now is a good time to buy a home.
Last month, 30% said that now was a good time to buy a home. This is compared to just 27% in May, but down from 32% one year ago.
However, the seller’s market continues to dominate. 39% said that now was a good time to sell a home, as compared to 32% in May. The gap between this statistic and the percent of people who think now is a good time to buy shows that the seller’s market is strengthening.
But the seller’s market shouldn’t deter home buyers. According to the sentiment, now is still a good time to buy a home.
This is being driven by low mortgage rates. While rates have been rising lately, they are still well below the historical averages. This had made home buying more easily affordable.
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.
Four of the six components of the Home Purchase Sentiment Index rose this past month, representing a positive outlook for the next year.
For example, one series of data tracked is how concerned people are with their job situation. In May the sentiment came in at 71%, but last month it dropped to 66%. This shows that people are getting less concerned about their current employment situation for the coming months.
However, the expectation for wages to rise over the next 12 months dropped, but only slightly. Still, it shows that would-be home buyers and sellers are concerned about how much money they’ll be making.
To counteract this, the expectation for mortgage rates over the next 12 months is that they will drop despite the recent increases in rates.
If mortgage rates do drop over the coming year, they will continue to fuel more affordable home buying, but it could also make the seller’s market more exaggerated.
Frankly, there’s no telling exactly what will happen to mortgage rates over the next year.
Overall Sentiment Dips Slightly
Home buying sentiment has hit the highest mark ever recorded in the report’s seven-year history.
Data hasn’t been getting tracked for too long, but it shows that the housing market and the economy have been growing at a healthy pace for a while now.
Unfortunately for home buyers, home prices are still expected to rise over the next year. There are plenty of factors that are working against buyers, but there are other factors that are assisting home buyers.
Low mortgage rates have been aiding home buyers for a few years. But the Fed will likely be raising their rate at least one more time this year, so it could be difficult for mortgage rates to remain so low.
The survey shows that now is a good time to buy a home. While home buyers can always find reasons why now is not the right time, it’s hard to imagine a stronger housing market than the one right now.
Mortgage rates change every day, and the Home Purchase Sentiment Index expects them to drop 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.