Today’s higher mortgage rate reality is finally sinking in with potential homebuyers and sellers.
As average 30-year mortgage rates have stayed stuck around 7%, the net share of consumers who believe they’ll fall in the next 12 months declined sharply in Fannie Mae’s latest survey on housing market attitudes.
Just 35% of respondents polled by the mortgage giant in January now expect mortgage rates to drop, down from 42% in December and a survey-high 45% in November. The share of consumers who think rates will rise jumped to 32%, from 25%.
Housing market economists have warned that mortgage rates might not fall much this year after the Fed lowered its expectations for rate-cutting and uncertainties linger over how President Donald Trump’s economic agenda could affect inflation and economic growth.
But for many months, consumers stayed stubbornly optimistic that rates were headed lower. That appears to be shifting.
“Consumers seem increasingly pessimistic that housing affordability conditions will improve across the board, as a growing share expects home prices, rent prices, and mortgage rates will all go up,” Kim Betancourt, Fannie Mae’s vice president of multifamily economics and strategic research, said in a statement.
Read more: 5 strategies to get the lowest mortgage rates in 2025
Despite the pessimism about mortgage rates, Fannie Mae’s overall Home Purchase Sentiment Index rose 0.3 points to 73.4, as buyers and sellers grew slightly more optimistic about buying and selling conditions and home prices in the next 12 months.
The percentage of respondents who believe home prices will rise in the next year jumped to 43%, from 38%, while the share of those who think prices will fall declined to 22%, from 27%.
Meanwhile, consumers are also growing more concerned about rising rents. 65% now think home rental prices will increase, up from 57% in December.
The Home Purchase Sentiment Index is derived from select questions from Fannie Mae’s monthly National Housing Survey of about 1,000 adults. The January survey was conducted between Jan. 1 and Jan. 21.
Claire Boston is a senior reporter for chof360 Finance covering housing, mortgages, and home insurance.
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