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Americans are more hopeful that the economy is on the right track and that mortgage rates will come down than they were a year ago, but only 1 in 5 thought December was a good time to buy a home, according to a monthly survey by mortgage giant Fannie Mae.
While just 22 percent of homeowners and renters participating in Fannie Mae’s National Housing Survey said December was a good time to buy, that’s up from 17 percent a year ago and an all-time low of 14 percent registered in May 2024.
Seller sentiment also declined from November to December, but improved from a year ago. Although 63 percent of those surveyed in December said it was a good time to sell, that’s down from 64 percent in November and a 2024 peak of 67 percent in April.
With three other components of Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreasing from November to December, the index dropped 1.9 points, to 73.1, but was still up 5.9 points from a year ago.
Mark Palim
“Even though the HPSI fell to end the year, consumer sentiment toward the housing market finished 2024 substantially above year-ago levels, attributable in part to respondents’ ongoing expectations that mortgage rates will decline,” Fannie Mae Chief Economist Mark Palim said, in a statement.
Palim said Fannie Mae economists expect “a modest decline in mortgage rates, decelerating home price growth, and higher wage growth to improve the relative affordability of purchasing a home in the new year, though consumers’ experiences will likely differ depending on where they live,” Palim said.
In their final forecast of 2024, Fannie Mae economists predicted sales of existing homes would remain near 30-year lows this year as elevated mortgage rates keep many would-be sellers feeling locked in to their existing loans.
Source: Fannie Mae National Housing Survey, December 2024.
Homebuyer sentiment hit a 2024 peak in November, with 23 percent of those surveyed saying it was a good time to buy a home.
The one percentage point drop among those who said December was a good time to buy — combined with a one percentage point increase in those who said it was a bad time to buy — resulted in a three percentage point drop in the net share of those who said it was a good time to buy, to negative 57 percent.
Continued wage growth and limited inventory means buying a home “will still require market savviness by would-be homebuyers in what is expected to remain, broadly speaking, a highly competitive housing market,” Palim said.
Source: Fannie Mae National Housing Survey, December 2024.
With the percentage of respondents who said December was a good time to sell down one percentage point from November and the percentage who said it was a bad time to sell increasing by one percentage point, to 36 percent, the net share who said December was a good time to sell decreased two percentage points to 27 percent.
Source: Fannie Mae National Housing Survey, December 2024.
Most Americans polled in December said they expect home prices will keep going up over the next 12 months (38 percent) or stay the same (35 percent). While only 27 percent of Americans polled in December thought home prices would come down in the next year, that’s up from 25 percent in November.
A LendingTree survey last fall found that elevated home prices have nearly four in 10 Americans thinking that the housing market is at risk of crashing in 2025, and more than one in three are hoping it will.
Source: Fannie Mae National Housing Survey, December 2024.
While more Americans thought mortgage rates would come down in the year ahead (42 percent) than go up (25 percent) in December’s poll, the net share of those expecting rate relief in 2025 was down four percentage points from November.
When the survey was fielded between Dec. 1 and Dec. 13, mortgage rates were taking a breather from their steady climb upward from 2024 lows seen in September.
Since hitting a 2024 low of 6.03 percent on Sept. 17 in anticipation of three Federal Reserve rate cuts, mortgage rates have climbed closer to 7 percent over worries that the Fed will be more cautious about cutting rates this year.
Source: Fannie Mae National Housing Survey, December 2024.
While most Americans polled in December (77 percent) said they weren’t concerned about losing their jobs in the next 12 months, the percentage who said they were increased to 22 percent. As a result, the net share of those who said they were not concerned about losing their jobs decreased by four percentage points from November to December to 54 percent.
Source: Fannie Mae National Housing Survey, December 2024.
Most households polled in December (70 percent) said their income was about the same as it was a year ago. With only 11 percent saying household income was significantly lower, the net share of those who say their household income is significantly higher than it was 12 months ago increased one percentage point from November to 6 percent.
Source: Fannie Mae National Housing Survey, December 2024.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) distills six questions from the National Housing Survey into a single number. With household income the only HPSI component to improve from November to December, the index fell to its lowest level since September, when it registered 73.9.
“While [Americans surveyed by Fannie Mae] remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in homebuying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions,” Palim said.
Source: Fannie Mae National Housing Survey, December 2024.
Although not factored into the HPSI, the survey also asks household financial decision-makers about their views on the economy.
While just 33 percent of Americans said they thought the economy was on the right track in December, that was the highest reading of the year, up from 25 percent in May.
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