Key Highlights
- Share of buyers thinking now is good time to buy fell to 54% in September from August’s 59%, according to new Fannie Mae survey
- Sellers more on board with selling
The good news about Fannie Mae’s latest survey about whether or not it’s a good time to sell? An improvement compared with the beginning months of the COVID pandemic, as more sellers are comfortable with potential buyers traipsing through their homes than they were during the spring- and summertime. If this sentiment continues, for-sale home supplies could be bolstered around the country.
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The bad news? Despite near historically low interest rates giving more buyers more purchasing power, home prices, according to CoreLogic, were up nearly +6% annually in September. On top of this nearly +6% increase in home prices, competitive and almost ubiquitous bidding wars due to near historically low home supplies raise home prices even more. Such increases in home prices with almost expected bidding wars are making potential home buyers rethink and pause home purchases. Buyers have to be able to afford their buying options in order to have confidence in them.
To spur buyers’ confidence in the market, Doug Duncan, Fannie Mae’s chief economist said, “…We believe the wild card to be whether sellers (will) enter the market…to meet strong home buying demand. The demand is particularly strong in more affordable regions of the country…” Home prices in the Midwest region of the country have been particularly affected…they’ve been increasing at the highest rates over the last two decades!
The Mortgage Bankers Association’s latest data indicates that average loan sizes in mortgage purchase applications have pushed record highs over the past several weeks. These average higher loan sizes reflect these increasingly high home prices. With affordability already hurting, more and more buyers on the low end of the market will be elbowed out.
Duncan said, “The home purchase market requires the proper mix of home price growth and continued economic recovery to achieve sustainable levels of housing activity.” At the moment, price growth is pushing this mix out of whack for more and more homebuyers. No wonder Fannie Mae’s buyer confidence levels were lower in September than in August.
Thanks to CNBC.
Also read: Easiest and Hardest Places to Buy a Home, Bidding Wars Are Down But Not Out, Prices in Canada and United Kingdom Going Up
