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Despite challenges, homeownership looks better than ever

Share of consumers who say they’d buy a home if they moved hits all-time high of 72 percent, according to Fannie Mae’s National Housing Survey.

Most Americans think it’s a bad time to buy a home, but nearly three out of four say they’d still rather buy then rent the next time they move.

Those are the latest findings of an in-depth monthly survey of consumer attitudes about housing markets and the economy by mortgage giant Fannie Mae.

Fannie Mae’s latest National Housing Survey found that Americans are increasingly confident about their finances and job security, and that a record 72 percent would buy a home if they were going to move.

But many of those would-be homebuyers have seen the headlines about rising home prices and shortages of listings in many markets, and most — 56 percent — think it’s a bad time to buy.

Doug Duncan | Photo credit: Fannie Mae

Consumers “appear to be acutely aware of higher home prices and the low supply of homes,” as those are the two reasons cited most often by those who say it’s not a good time to buy, said Fannie Mae Chief Economist Doug Duncan, in a statement.

“However, despite the challenging buying conditions, consumers do appear more intent to purchase on their next move, a preference that may be supported by the expectation of continued low mortgage rates, as well as the elevated savings rate during the pandemic, which may have allowed many to afford a down payment.”

Source: Fannie Mae National Housing Survey.

Among the roughly 1,000 homeowners and renters Fannie Mae surveyed in May, only 35 percent thought it was a good time to buy a home, down from 47 percent in April.

With 56 percent saying it’s a bad time to buy, the net share of those who say it’s a good time to buy plummeted 20 percentage points. That’s the largest month-over-month decline in homebuyer sentiment in survey records dating back to 2010, bringing “net good time” to buy share at an all-time low of -21 percent.

Source: Fannie Mae National Housing Survey.

The good news for consumers and real estate brokers and agents is that most of those surveyed think it’s a good time to be a seller — which could help bring more listings onto the market in the months ahead.

Although the share of respondents who said it was a good time to sell remained constant from April to May, at 67 percent, the percentage of those who said it’s a bad time to sell dropped by a percentage point, to 25 percent. So the net share of those who think it’s a good time to sell also increased by a percentage point, to 42 percent — roughly where it was before the pandemic.

Source: Fannie Mae National Housing Survey.

With the pandemic continuing to wane in the U.S., Americans who have jobs are less anxious about losing them, giving would-be homebuyers more confidence about taking on the commitment of a 30-year mortgage.

With 87 percent of employed workers saying they’re not concerned about losing their jobs in the next 12 months, the net share of those who aren’t concerned jumped 11 percentage points in May, to 75 percent.

Source: Fannie Mae National Housing Survey.

Rising household income is another factor with the potential to boost homebuyer demand. With 29 percent of Americans saying their household income is “significantly higher” than 12 months ago, and only 13 percent saying it was significantly lower, the “net significantly higher” share was up 12 percentage points from April to May.

Source: Fannie Mae National Housing Survey.

With interest rates still near historic lows, and many households socking away money for down payments, the share of consumers who said they’d buy a home was up 3 percentage points in May, to an all-time high of 72 percent. At the same time, the share who said they would rent fell 5 percentage points to 23 percent, a new survey low.

Source: Fannie Mae National Housing Survey.

Although Americans are clearly eager to be homeowners, there’s slightly less urgency that rising prices and mortgage rates will put that goal out of reach.

The net share of Americans who say home prices will go up decreased 2 percentage points from April to May, although 49 percent still expect home prices to rise over the next 12 months.

Source: Fannie Mae National Housing Survey.

The net share expecting mortgage rates to go down over the next 12 months increased by 4 percentage points month over month, with the percentage of Americans expecting rates to rise falling from 54 percent to 49 percent.

Source: Fannie Mae National Housing Survey.

Access to mortgage credit is not an obstacle for most consumers surveyed by Fannie Mae, with 60 percent saying getting a mortgage would be easy, up 2 percentage points from April. The share who said it would be difficult to get a mortgage fell one percentage point from April to May, to 35 percent.

Source: Fannie Mae National Housing Survey.

Fannie Mae boils the information collected each month from about 1,000 homeowners and renters into a Home Purchase Sentiment Index. The index increased one point from April to May, to 80.0, which is 12.5 points higher than the same time last year.

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