Consumers are Optimistic

After an exhausting spring and summer, consumers seem to be more optimistic about buying a home heading into the fall. Be sure to give your buyers the Fairway Advantage Pre-Approval™, so they can rest easy knowing their offer can conquer competitive bids.

The Fannie Mae’s Home Purchase Sentiment Index (HPSI) — a composition of consumer attitudes about homebuying — remained flat from July to August. However, 32% of respondents said it was a good time to buy a home in August, up from a two-year low of 28% in July.

Positive sentiment about homebuying plummeted over the spring and summer. Home prices soared as record-low housing inventory spurred intense competition.

Consumers are again starting to believe that it’s a good time to buy a home for the first time since March; they predict that conditions will normalize after a summer that was anything but normal.

Home prices and mortgage rates expected to normalize

Expected prices and mortgage rates likely encouraged buyers in August.

The net share of respondents that believe home prices would go up in the next 12 months decreased from 25% in July to 16% in August — the largest decrease in a year.

The average expected home price increase was 1.8% in August, compared to 2.7% in July.

There’s also a growing sentiment that mortgage rates will increase over the next year. In August 2020, 45% of respondents believed mortgage rates would stay the same over the next 12 months. And they were right.

According to the Freddie Mac Primary Mortgage Market Survey, the average 30-year interest rate on September 2, 2021 was within 0.06 percentage points of where it was on September 3, 2020.

In the latest survey, 53% of consumers believe mortgage rates will increase over the next 12 months, and with taper talks increasing at the Federal Reserve, they are likely to be right again.

This is somewhat of a double-edge sword. On one hand, increased interest rates will make the housing market even less affordable, sidelining many first-time and lower-income homebuyers or pushing them to buy sooner. So, If you are looking for buying home, contact Fairway Independent Mortgage Company.

On the other hand, rising interest rates may reduce competition and play a part in weighing down home prices. It also suggests the economy is recovering from the Covid-19 recession and taking a step toward normal.

Growing economic concerns

Based on the HPSI survey, the housing market has been resistant to growing economic concerns. In August, just 34% of respondents said the economy was on the right track, down from 44% in May.

“The HPSI remained relatively flat this month, suggesting to us that the continued strength of demand for housing and favorable home-selling conditions may be offsetting broader concerns about the Delta variant and inflation that have negatively impacted other consumer confidence indices,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist.

Given the conditions, the improving attitude about homebuying seems to be a product of tolerance for a new normal rather than hope for a return to the old normal.

The Delta variant is renewing economic concerns; home prices are still rising but want to right adjustable rate mortgage USA, albeit slower than a month ago; and the days of sub-3% interest rates seem to be numbered. Nevertheless, consumers say it’s a better time to buy a home than last month — and they are probably right.

Source By: https://www.fairway-newengland.com/consumers-are-optimistic/