In a summer that has seen sentiment rise and fall like the tide amid short supplies that have driven prices up in many markets and fueled competition among many buyers, particularly for entry-level homes, agents may be surprised to learn there has been a jolt of optimism among potential homebuyers.
According to a monthly sentiment survey from Fannie Mae, housing confidence rose in September to match the all-time high set in June. Fueling the increase is a big jump in the number of current renters who are saying it is a perfect time to buy. According to a CNBC report, Doug Duncan, Fannie Mae’s chief economist, said the number of these respondents that said they believe home prices would go up in the next year dropped significantly.
“Perceptions of easing inventory helped boost the net share saying that now is a good time to buy, which is consistent with less bullish home price appreciation sentiment during the month.”
Whether numbers back that up is another thing. According to the National Association of Realtors, inventory at the end of August was down 6.5 percent from the year-earlier period. This may have fueled home price gains. Lawrence Yun, chief economist for the Realtors, pointed out that pending home sales, which measure contracts signed, fell in August and have been down five of the last six months amid low supply.
“Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.
Duncan pointed out that while existing home supply is low, supply of new homes has been on the rise, even though builders are still nowhere near their normal historical levels of production, but they are increasing supply — albeit at higher prices.
“So to the extent they were focused on new homes, [the survey] may have picked up on that. Given the 30-year low in existing supply, that’s a reasonable dynamic to see.”
Moreover, consumer confidence in the economy overall has been rising, despite a setback in September, likely due to the hurricanes.
Another factor is credit availability, which the Mortgage Bankers Association reported increased in September, as well. Not surprisingly, Lynn Fisher, MBA’s vice president of research and economics, noted that credit has eased most for larger loans to buy more expensive homes. That is because most of the sales activity today is happening on the higher end of the housing market, where there are more homes for sale.
“For the year-to-date, the supply of credit has increased only modestly in the non-jumbo space, while it has expanded significantly among jumbo programs.”