Real Estate News

Fannie Mae’s latest purchase sentiment index is up more than 10 points in the past year, with a record share of consumers expecting mortgage rates to fall.

While home sales have yet to pick up, there are signs that could change in the new year as consumers show increasing optimism about the real estate market.

The Fannie Mae Home Purchase Sentiment index moved up by 0.4 points in November to 75, marking the fourth consecutive month of upward momentum. The index has jumped 10.7 points in the past year.

While consumers are decidedly more optimistic — the index is at its highest level since February 2022 — they are still showing some reluctance to close the deal, with only 23% of the 1,000 individuals polled saying it’s a good time to buy a home. Despite the relatively small share, the percentage is up significantly from a year ago, when it fell to a survey low of 14%. Overall, the findings point to more optimism in the coming year. 

Record share of consumers expect rates to fall

The survey found that 45% of consumers expect mortgage rates to drop in the next 12 months — a new high. Economists have mixed views on where rates will land in 2025, with some expecting them to fall to the low 6% range but others predicting they’ll stick closer to 7%.

Consumers are feeling reasonably upbeat about their employment and financial situations as well: 78% are not concerned about losing their job in the coming year, and 16% said their household income has risen significantly in the past year, while just 12% said it had declined.

The rising overall sentiment is also likely due to consumers’ slow-but-steady acclimation to current market conditions, said Mark Palim, Fannie Mae’s chief economist.

“Of course, high home prices and high mortgage rates remain the primary reasons why the vast majority of consumers think it’s a ‘bad time to buy’ — trends that we expect to continue into the new year,” Palim said.

Despite a continued rise in prices, attitudes have improved slightly since last year. In the latest survey, 38% of consumers said they believe home prices will go up in the next 12 months vs. 41% a year ago. 

Purchase activity could increase in 2025

Many housing experts expect home price growth to slow in the coming year, and that could prompt more consumers to come off the sidelines and make a purchase, according to the report.

Agents, too, are feeling better about the real estate market in 2025. Two recent surveys pointed to an increase in agent optimism, with one finding that agents are more confident about where the market is headed, and the other finding that, compared to a year ago, significantly more agents are expecting “good” sales in the next six months.

For both agents and consumers, however, there’s still plenty of room for improvement. While home purchase sentiment has gone up significantly in the past year, the housing market will likely need a big boost in order to propel it to the levels seen between 2014 and 2019 when it reached the 80s and low 90s.