Despite that income growth, respondents remained pessimistic that home prices and mortgage rates would improve over the next 12 months. 42% expect home prices to rise further, while only 25% anticipate lower mortgage rates.
“While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability,” Duncan said. “This is most clearly evidenced by our ‘good time to buy’ component falling to a new survey low this month. On the other hand, homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months.
“This suggests to us that, despite the so-called ‘lock-in effect,’ some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons, which may lead to an increase in listings in the near future.”
Fannie Mae said potential increases in housing inventory will enable slightly more sales activity through year-end. But the historic lack of homebuyer optimism captured in May underscores the significant affordability headwinds facing the market.
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