Homebuyer confidence slipped in March after rebounding slightly in February, as measured by theFannie Mae Home Purchase Sentiment Index, whichdropped 2.1 points to 73.2. Consumers are well-attuned to the challenges facing buyers from higher mortgage rates torapidly rising home pricesto a near all-time low number of homes for sale.

Higher Rates and Market Conditions Challenge Homebuyers

The share of survey respondents saying it is a bad time to buy outnumbered those saying it is a good time to buy three to one, leading to the largest net bad time to buy response recorded in the last three years (49%). RecentRealtor.com housing datasuggests that we could be near a turning point in the number of homes for sale, which could start to increase as soon as this summer. However, this reversal may not immediately boost homebuyer confidence in the face of higher home prices and mortgage rates. In fact, a moderating sales pace, as seen inrecent existing home sales dataalong witha growing number of new sellersas we approachthe best week of the year to list a home for sale, are likely both contributing to the shrinking declines in the number of homes for sale.

Withmortgage rates rising rapidly so far in 2022, consumers are expecting more of the same. A survey high nearly seven in ten (69%) believe that mortgage rates will go up. Only 4% of respondents indicated that they believe mortgage rates will fall while just less than a quarter of respondents believe mortgage rates will stay the same.

Consumers Believe Home Sellers Continue to Have the Edge, but Diverge on How Long Price Momentum will Continue

Consumer assessment of selling conditions was equally lopsided, but in the other direction. The share of respondents saying now is a good time to sell outnumbered those saying it is a bad time by more than three to one. The recentrun-up in prices, which has yet to show signs of relenting, is shaping consumer attitudes toward housing in divergent directions. Rising shares of consumers believe prices will go up and go down, while the share saying home prices will stay the same declined. On net, the increase among consumers believing that home prices will go down was higher, but in total, 28 percent more respondents believe that home prices will go up instead of down.

Sentiment Toward Jobs Market and Overall Economic Conditions is Mixed

With theunemployment rate lowandweekly jobless claims data reflecting very low levels of employer layoffs, consumers generally feel confident in their job security. Despite a small decline from last month, the number of respondents saying they are not concerned about losing their job in the next year outnumbered those saying they are concerned nearly eight to one. While attitudes toward the jobs market are positive, two indicators are worth considering in light of inflation near 40-year highs. First, the share of respondents who say that their income is significantly higher than one year ago gained slightly over last month to a net of 16% over those who said their income was significantly lower. Notably however, perhaps reflecting an economy in which households are experiencing divergent outcomes, the share saying that their income was about the same as 12 months ago declined to a 3 year low. Meanwhile, inflation pains likely contributed to the 73% of consumers who said the economy is on the wrong track, far greater than the 21% who believe that the economy is on the right track.

What This Means for Housing Going Into the Spring Season

Weakening homebuyer sentiment may help restore relatively more balance to a housing market that has been extraordinarily tipped in favor of sellers. Ashome sales moderateandbuilders continue to ramp up production, we expect price momentum to slow, but with the housing market severely under-supplied over the last decade, it will take time to get back to a truly balanced market.

For all your real estate needs, please call me, Marie McLaughlin 727-858-7569.

Source: Realtor.com