Consumer Confidence in Real Estate Reaches New High

Dec 5, 2017Market Trends

More Americans think that now is a good time to buy a home, according to the Fannie Mae Home Purchase Sentiment Index® (HPSI) from February 2017. The survey of 1,000 consumers reached an all-time high of 88.3%, indicating the strongest consumer confidence in real estate since the HPSI began tracking in 2011.

In fact, survey respondents said that now is a good time to both buy and sell a home, with each category showing gains. Between the two categories, gains in confidence in home buying edged out confidence in home selling by 4 percentage points.

Overall, consumer confidence in housing has been bolstered by a greater sense of job security and rising wages. February’s survey shows that the percentage of respondents feeling confident about their employment reached an all-time high of 78%. About 19% of respondents reported that their household income was “significantly higher” than a year ago.

Surprisingly, the survey revealed that most Americans expect mortgage interest rates to remain the same, or decrease, during the upcoming months. This contradicts well-publicized intentions by the Federal Reserve to raise the benchmark lending rate several times during 2017. It’s possible that many consumers do not understand how the Federal Reserve can influence interest rates. Or, despite the signals, consumers do not believe higher rates will happen.

Yet rising rates are happening, and are likely to continue an upward trend. As of March 10, the average interest rate for a 30-year, fixed-rate mortgage reached its highest point in 2017, at 4.21%. Each week, Freddie Mac publishes a weekly mortgage market survey, which is viewable at www.freddiemac.com. The newest weekly rate averages are at the bottom left of the home page.

While February’s HPSI is encouraging, it also shows that home buyers may be taking low rates for granted, and may not be prepared for the impact of rising rates on their ability to qualify for a mortgage. Even a modest uptick in mortgage rates, when combined with rising home prices, can make it more difficult for first-time home buyers to enter the market.

Interest rates and home prices are always changing. Working with an Exclusive Buyer Agent is the best way to prepare for home buying! Your EBA will always provide you with current market information, fiduciary guidance and referrals to trustworthy lenders!

Find an EBA in your area today!

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