Consumer confidence in housing hits new low, says Fannie Mae

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The housing stock is increasing as houses stay on the market longer

An “Open House” sign is displayed when prospective homebuyers reach a property for sale in Columbus, Ohio.

Ty Wright | Bloomberg | Getty Images

Rising mortgage rates, high home prices and uncertainty in the broader economy are making Americans more pessimistic about the state of the housing market.

According to a monthly Fannie Mae survey in October, just 16% of consumers said now is a good time to buy a home. That’s the lowest percentage since the survey began in 2011. The percentage of respondents who think now is a good time to sell a home also fell from 59% to 51%.

Fannie Mae’s survey isn’t just about buying and selling, it tests sentiment around house prices, mortgage rates and the job market. He combines them all into one number that has also fallen for the eighth straight month and is now at a new low.

A larger proportion of consumers, 37%, said they expect house prices to fall over the next 12 months. That compares to 35% in September. More also believe that mortgage rates will rise.

Rapidly rising interest rates got the red hot housing market going in early summer. The average interest rate on the popular 30-year fixed-rate mortgage started the year near a record low of around 3%. According to Mortgage News Daily, it surpassed 6% in June and is now just over 7%.

“As persistent affordability constraints reduce demand from homebuyers and homeowners are reluctant to sell at potentially discounted prices, we expect home sales to slow even further in the coming months, in line with our forecast,” wrote Doug Duncan, Fannie Mae’s chief economist , in a publication.

According to the Black Knight, home prices fell again in September, albeit at a slower monthly pace than in July and August. Prices are now down 2.6% since June, the first three-month decline since 2018, when interest rates also rose. It’s the worst three-month stretch for home prices since early 2009. However, prices in September were still 10.7% higher than the same month last year.