US homebuyer confidence up in December; more see loan rates falling

Applied Energetics

08/01/2024 18:11

By Amina Niasse
       NEW YORK, Jan 8 (Reuters) - U.S. homebuyer confidence
improved in December, with more homeowners anticipating that
mortgage rates would fall further this year, but it could take
sometime for housing supply to recover as many remain hesitant
to sell their homes. 
    Mortgage finance agency Fannie Mae said on Monday its Home
Purchase Sentiment Index rose 2.9 points to 67.2 in December. It
was up 6.2 points year-over-year.
    "Notably, homeowners and higher-income groups reported
greater rate optimism than renters; in fact, for the first time
in our National Housing Survey's history, more homeowners, on
net, believe mortgage rates will go down than go up," said Mark
Palim, deputy chief economist at Fannie Mae.
    The rate on the popular 30-year fixed-rate mortgage has
plunged from a 23-year high of 7.79% in late October, tracking
the decline in U.S. Treasury yields. It averaged 6.62% last
week, according to data from mortgage finance agency Freddie
Mac. Higher mortgage rates have discouraged homeowners locked
into lower rates from selling their homes, shortening inventory
and pushing existing home sales down precipitously since 2022. 
    "Homeowners have told us repeatedly of late that high
mortgage rates are the top reason why it's both a bad time to
buy and sell a home, and so a more positive mortgage rate
outlook may incent some to list their homes for sale, helping
increase the supply of existing homes in the new year," said
Palim. 
    The net share of respondents expecting mortgage rates to
fall this year increased 22 points, but homeowners remain
reluctant to list their homes. The net share of those saying it
is a good time to sell fell 5 points, and the net share of those
who believed it is a good time to buy rose 5 points.
    "Like many others, even if rates fall further, we continue
to believe that affordability will be tempered in part by
elevated home prices, especially for first-time homebuyers, and
we expect the pace of home sales improvement to be modest in
2024," said Palim.

 (Reporting by Amina Niasse; Editing by Richard Chang and Andrea
Ricci)
 ((amina.niasse@thomsonreuters.com;))