Homebuyer sentiment reached its highest level in more than two years in September, but that may not last as mortgage rates continue to rise.
The Fannie Mae Home Purchase Sentiment Index jumped 1.8 points last month to 73.9, fueled by the expectation that mortgage rates will decline in the next 12 months.
Optimism around rates was at a survey high, according to Fannie Mae, with a record 42% of consumers saying they expect mortgage rates to decline — a significant increase since June, when only 24% anticipated a drop in rates. Just under a third of respondents expect rates to stay the same, while 27% think they’ll go up in the next 12 months.
Overall sentiment around housing was mixed, however, with many respondents expecting home prices to go up, and only 19% indicating that it was a good time to buy.
Why the mood may change: Sentiment could quickly sour if the hoped-for declines in rates fail to materialize. Mortgage rates hit an all-year low at the end of September after the Federal Reserve cut interest rates by 50 basis points, but those declines didn’t last for long.
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Author: Dave Gallagher
