Consumer Sentiment Toward Housing at Highest Level in Nearly Two Years
Written By: Joel Palmer, Op-Ed Writer
Consumers surveyed by Fannie Mae are increasingly optimistic about mortgage rates and their job stability, but not yet enough to want to buy a home in large numbers.
The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 3.5 points in January to 70.7, its highest level since March 2022.
In January, 82 percent of consumers indicated that they are not concerned about losing their job in the next 12 months, up from 75 percent last month.
Additionally, an all-time survey-high 36 percent of respondents indicated that they expect mortgage rates to go down in the next 12 months.
However, consumer perceptions of homebuying conditions remain overwhelmingly pessimistic, with only 17 percent of consumers indicating it’s a good time to buy a home, unchanged from the previous month.
“For the first time in our National Housing Survey’s history, a greater share of consumers believe mortgage rates will decrease over the next year, rather than increase. Consumers also expressed greater confidence in their job situations this month, another sign that housing sentiment may continue to improve in 2024,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
The percentage of respondents who say it is a good time to sell a home increased from 57 percent to 60 percent. The percentage of respondents who say home prices will go up in the next 12 months decreased from 39 percent to 37 percent.
While it’s still challenging for many to buy a home, another tool for low-income buyers was released earlier this month.
Freddie Mac announced that potential homebuyers earning 50 percent of area median income or less are eligible for a $2,500 credit that may help with down payment and other costs at closing. The initiative is available to very low-income families who qualify for the company’s Home Possible and HFA Advantage products. It will be effective March 1, 2024.
“Today’s announcement is a vital lifeline for would-be homeowners, as studies show that down payment and closing costs are among the largest barriers to homeownership for very low-income homebuyers,” said Sonu Mittal, SVP and head of Single-Family Acquisitions at Freddie Mac.
In 2023, Freddie Mac financed approximately 800,000 home purchases, with first-time homebuyers representing about 51 percent of those purchases, the highest percentage since the company started tracking that statistic three decades ago.
The move is similar to a temporary enhancement Fannie Mae introduced to its HomeReady product. The enhancement includes a $2,500 loan-level price adjustment credit for very low-income purchase borrowers that can be used for down payment and closing costs.
Fannie’s credit will be effective for whole loans purchased on or after March 1, 2024 to February 28, 2025, and for loans delivered into MBS with issue dates on or after March 1, 2024 to February 1, 2025.
Potential homebuyers may soon have to worry less about an onslaught of solicitations known as trigger leads.
Last week, Rep. John Rose (R-TN) and Rep. Ritchie Torres (D-NY) introduced the Homebuyers Privacy Protection Act with Rep. Ritchie Torres (D-NY-15).
The U.S. House bill would prohibit a consumer reporting agency from furnishing a trigger lead unless an individual chooses to opt-in. In that case, only certain approved groups will be notified that an individual is seeking a new mortgage.
The bill comes a month after a pair of Senators, Bill Hagerty (R-TN) and Jack Reed (D-RI), introduced a bill of the same name in the U.S. Senate. Rose and Torres also introduced separate bills in 2023 to tackle the issue.
Trigger leads occur when credit bureaus sell a potential borrower’s information after a credit application “triggers” a credit report pull. The credit bureaus can sell the lead to data brokers and other lenders without the consumer’s knowledge or approval.
Opponents of the practice say trigger leads cause borrowers to be inundated with aggressive marketing pitches, including unsolicited calls, texts, and mailings. What’s more, recipients of trigger leads have reportedly misrepresented themselves to borrowers.
Others say consumers potentially receive more competitive offers when seeking credit, especially mortgages. There are also proponents of trigger leads who have expressed concern that legislation to restrict their use would negatively affect lenders’ ability to market their products and services, especially smaller institutions.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
