Buyers went from unhappy to not-quite-as unhappy. “Even small declines in rates and home prices … may not produce sufficient purchasing power,” says economist.
WASHINGTON – Fannie Mae said Monday that sentiment over the U.S. housing market improved slightly in December, though survey respondents said that now is not the time to buy a new home.
Survey results from Fannie Mae’s Home Purchase Sentiment Index showed modest improvement in December as would-be buyers reacted to a slight decline in mortgage rates and average home prices.
Doug Duncan, the chief economist for Fannie Mae, said the index remains very low and respondents remained concerned about pricing.
“As we enter 2023, we expect affordability to remain the top challenge for potential homebuyers, as even small declines in rates and home prices – from the perspective of the buyer – may not produce sufficient purchasing power,” he said.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index showed the average price of a home increased by 9.2% on an annual basis in October, the last full month for which it has data, down from the 10.7% increase reported in the previous month. The decline marked the fourth month in a row for a slump in home prices.
The National Association of Realtors, however, showed existing home sales declined 7.7% in November, relative to October levels. Year-over-year, sales fell from 6.33 million in November 2021 to 4.09 million during the same month last year.
Fannie Mae’s survey found that 79% of the respondents feel this is clearly not a buyers’ market. Duncan added that availability could be stifled too as would-be sellers with lower-than-average mortgage rates may be sitting on their house until market conditions improve.
“We think the resulting tension will contribute to a continued decline in home sales in the coming months,” he said.
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