Just a week into the new year, and already there are indications that homebuyers and sellers are feeling better about the housing market.
Consumer sentiment toward home purchases in December was “substantially higher” than the same time a year earlier, according to mortgage giant Fannie Mae’s latest data released Tuesday. That uptick was mostly spurred by a belief among consumers that mortgage rates will decline over the next 12 months.
At the same time, the results showed that compared to December 2023, homebuyers and sellers are feeling more optimistic about buying and selling conditions in general, the report found.
Taken on its own, the data seem to signal the outlook for the housing market could be improving. It also could be an indicator that more buyers are preparing to enter the market. Moreover, Fannie Mae chief economist Mark Palim said in a statement it could even reflect “a slow acclimatization to the generally less-affordable market conditions."
From the Homes.com blog: Buyer's Market vs Seller's Market
Whether their acceptance of higher home prices and elevated mortgage rates results in buyers and sellers moving forward with transactions remains to be seen But, some economists, backed by data, say yes, it will mean more deals.
For example, last week when mortgage rates reached their highest average since July, Freddie Mac’s Chief Economist Sam Khater said “buyers appear to be more inclined to get off the sidelines” despite pricier monthly payments.
In fact, the number of contracts signed to purchase existing homes increased for the fourth month in a row in November, according to data released last week by the National Association of Realtors.
“Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” NAR chief economist Lawrence Yun said in a statement. But unlike Fannie Mae, Yun said, “Buyers are no longer waiting for or expecting mortgage rates to fall substantially.”
Either way, Yun suggested those in the market for a home are gaining strength in the market.
"Buyers are in a better position to negotiate as the market shifts away from a seller’s market," he said.