The seller’s market continues to dominate, and homeowners have definitely noticed.
In May, the sentiment that now was a good time to sell a home rose by six percentage points, making this the highest ever mark hit by the metric.
However, home buyers didn’t share the same positive outlook.
According to Fannie Mae’s Home Purchase Sentiment Index, the total home purchase sentiment index dropped to 86.2, down from 86.7 in April.
Despite the drop in the home purchase sentiment, the current sentiment is still much higher than it was just a few years ago.
The main reason the sentiment dropped was that a large number of people believed that now was not a good time to purchase a home. In fact, those that believed now was a good time to purchase a home dropped to 27 percent, the lowest level ever recorded in the metric.
The report also showed a mix of results for different metrics, all of which resulted in the small downtick in total sentiment.
Now may not be the most opportune moment to purchase a home historically, but if Fannie Mae’s report is any indication then it could become more difficult to purchase a home in the coming months.
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.
Based on the responses of those surveyed, there were mixed responses when it came to future expectations for mortgage rates.
The sentiment that mortgage rates were going to rise in the next 12 months rose, but the overall sentiment is still that mortgage rates are going to hold low over the next year.
This could happen, but it is hard to tell. The results of the Fed’s meeting next week could be a telling sign on the future of mortgage rates.
In more positive news, a majority of the respondents are more confident now that their income will rise in the next year than they were one month ago. The current sentiment for this is 18 percent positive, up from 13 percent.
While homes will get more expensive, rising income and lower mortgage rates could help offset any increase in price.
Overall Sentiment Dips Slightly
Home buying sentiment might have dropped in May, but that doesn’t mean it isn’t high.
Ever since the metric began getting tracked in 2011, the highest the sentiment has ever been is 88.3, reached this past February.
For comparison, the first ever reading in 2011 placed the home purchase sentiment at 60.
May’s sentiment of 86.2 is still relatively high, especially considering the history of the metric. If anything, the current sentiment shows that the economy has recovered fairly well and that home buyers are more optimistic about the future.
It’s also worth pointing out that respondents to Fannie Mae’s survey are less convinced that home prices will rise. In April, the expectation for home prices to rise in the next 12 months was 45 percent. In May, it was just 40 percent.
Home prices can’t rise forever, and some areas in the country have been seeing slowing prices already. There may never be a “perfect” time to purchase a home, but this certainly isn’t a bad time to lock in on low rates and find a home.
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.