Do you think it’s a good time to buy a home?
Surging mortgage rates, dwindling inventory, and soaring home prices are taking a toll on Americans’ attitudes toward ownership, according to a survey released Monday.
The home purchase sentiment index compiled by mortgage finance provider Fannie Mae fell in December, its fifth straight monthly decline.
Fannie’s index has six components. In December, two were lower compared to November, two were unchanged, and two increased. But the index was 2.5 percentage points lower than a year ago, with only one component higher.
|December 2016 Index||Change since last month||Change since last year|
|Good time to buy||32||+2||-3|
|Good time to sell||13||0||+5|
|Home prices will go up||35||0||-5|
|Mortgage rates will go down||-55||-4||-3|
|Confidence about not losing job||68||+4||-4|
|Household income is significantly higher||10||-5||-5|
The surge in consumer sentiment that’s been recorded since the presidential election is typical, Fannie chief economist Doug Duncan noted in a statement, and whether buyers can withstand the corresponding jump in mortgage rates is an open question.
In fact, it was the second yearly decline for the component that tracks the number of people who say it’s a good time to buy. That was a net 36% in December 2014, a net 35% in December 2015, and a net 32% last month.
While “good time to buy” and “good time to sell” are both subjective, respondents are also asked to weigh in on whether mortgage rates and home prices are likely to go up or down.
Most people – a net 55% – think rates will go up, and most experts agree. Of four professional forecasts compiled by MarketWatch last month, the median is for rates to average about 4.5% throughout 2017 – 30 basis points higher than their level last week.
Respondents were less certain about the direction of home prices, though. A net 46% thought they’d go up. Data provider CoreLogic agrees. The group forecast a 4.7% increase in rates from December 2016 to December 2017.