Mortgage Rate Reality Sinks In: Pessimism Grows Among Homebuyers and Sellers
As average 30-year mortgage rates remain steady at around 7%, consumer expectations of a decline have diminished, according to Fannie Mae's latest housing sentiment survey.
Only 35% of respondents now anticipate lower rates, compared to 42% in December and 45% in November. Conversely, the proportion anticipating higher rates has risen to 32%, up from 25%.
Economists have expressed concerns that mortgage rates may not experience significant reductions this year, given the Federal Reserve's lowered rate-cutting expectations and uncertainties surrounding the potential impact of President Donald Trump's economic agenda on inflation and growth.
"Consumers are increasingly pessimistic that housing affordability conditions will improve," said Kim Betancourt, Fannie Mae's Vice President of Multifamily Economics and Strategic Research. "An increasing number expect home prices, rent prices, and mortgage rates to all rise."
Despite the pessimism regarding mortgage rates, Fannie Mae's Home Purchase Sentiment Index has slightly increased to 73.4, indicating that buyers and sellers are somewhat more optimistic about market conditions and home prices over the next year.
43% of respondents expect home price increases, up from 38%, while only 22% anticipate declines, down from 27%.
Rent concerns are also escalating, with 65% of consumers anticipating rent increases, up from 57% in December.
The Home Purchase Sentiment Index is derived from Fannie Mae's monthly National Housing Survey, which polls approximately 1,000 adults. The January survey was conducted between January 1st and 21st.