Survey Reveals Growing Concern About the US Housing Market
Fannie Mae runs this survey monthly and found the December results surprising. The housing market has been booming for the past six months as demand increased for homes and refinances due to low rates.
The survey revealed the following:
- respondents who stated that it was a good time to buy a home fell from 57 percent to 52 percent.
- respondents who stated that it was a bad time to buy increased to 39 percent from 35 percent.
- respondents who stated that it was a good time to sell fell from 59 percent to 50 percent.
- respondents who stated it was a bad time to sell increased to 42 percent from 33 percent.
“The sell-side component fell for the first time since April, reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes,” said Doug Duncan, chief economist at Fannie Mae. “If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales.”
Consumers growing pessimism regarding the US economy could be the main contributor to less faith in the housing market. Furthermore, the prices of homes have increased drastically this year while wages have not.
“Looking forward, we could see new lows in the next couple of months as buyers remain relatively active, but a surge of new Covid cases may slow the number of sellers entering the market,” said Danielle Hale, chief economist at Realtor.com. “We eventually expect to see improvements in the supply of homes for sale, especially in the second half of the year. Until then, finding a home will continue to be a top challenge for buyers across all price ranges.”
With a Democratic sweep of Congress and the White House, government spending is expected to rise along with yields which will increase rates for those seeking a home.
“The boost to affordability from lower interest rates is rapidly being eroded by higher house prices, and we do not think mortgage rates will fall further,” wrote Matthew Pointon, property economist at Capital Economics. “Even if demand holds up, record low inventory will act to limit home sales.”