Published 09:02 IST, March 8th 2024
US homebuying sentiment rises; owners see favourable selling conditions
The trend suggests a potential uptick in much-needed home listings.
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US homebuying sentiment: US homebuying sentiment, in February, experienced its third consecutive monthly increase, largely driven by a growing perception among current homeowners that the present is an opportune time to sell their homes.
The trend suggests a potential uptick in much-needed home listings.
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According to Fannie Mae's Home Purchase Sentiment Index, sentiment rose by 2.1 points in February to reach 72.8, up from 70.7 in January. On a year-over-year basis, the index surged by over 25 per cent.
The proportion of surveyed consumers who believe it is a favourable time to sell a home increased to 65 per cent in February, up from 60 per cent the previous month. This component contributed majorly to the index's overall gain.
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Doug Duncan, Fannie Mae's senior vice president and chief economist, noted that consumer attitudes toward home-selling conditions saw a notable improvement in February.
Current homeowners, in particular, expressed heightened optimism about the prospects of selling their homes, potentially indicating an imminent increase in existing home listings.
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However, the inventory of homes for sale remains historically low, primarily due to inadequate homebuilding relative to demand.
Many current homeowners are also locked into lower-rate mortgages secured before interest rates began to rise, which has deterred potential sellers from listing their properties.
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While improved seller sentiment suggests an impending rise in supply, buyer sentiment remained predominantly negative.
Although it slightly increased to 19 per cent in February from 17 per cent in January, affordability concerns persist among prospective buyers, particularly with interest rates remaining relatively high.
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Duncan highlighted that a decline in mortgage rates, accompanied by a corresponding increase in sentiment, would benefit the upcoming spring homebuying season.
Nonetheless, affordability is expected to remain a crucial challenge for buyers until there is a substantial increase in net supply.
Data from Freddie Mac indicated that for the week ending March 7, the average rate on a 30-year fixed-rate home loan declined to 6.88 per cent from 6.94 per cent the previous week, ending a streak of four consecutive weekly increases.
While rates have eased from the two-decade highs near 8 per cent observed in October, 35 per cent of consumers anticipate this trend to persist into 2024, as reported by Fannie Mae.
(With Reuters Inputs)
09:02 IST, March 8th 2024