If you imagined 2020 was the year you would finally list your house for sale, you may have hit the brakes on those plans when the coronavirus pandemic arrived.But now, we’re more than six months
As Home Prices Increase Sellers Have The Upper Hand
Dated: October 9 2020
For the second consecutive month, Fannie Mae’s Home Purchase Sentiment Index, a composite index designed to track consumers’ desire to sell or buy a home, gained 3.5 points in September to 81.
Compared to this time last year, the HPSI is down 10.5 points, but has recovered more than half of its early pandemic-period decline when April’s HPSI hit its lowest reading since November 2011.
August’s HPSI survey revealed both a confident seller’s and buyer’s market, however, Fannie Mae reported September buyers showing more hesitancy. Despite real estate agents reporting record numbers, buyer morale fell 5% with 54% of respondents saying it is a good time to buy a home. Those who believe it is a bad time increased to 38%.
With the market heading into fall, sellers, on the other hand, proved more resilient as the percentage of respondents who said it was a good time to sell a home gained 8% to 56% in September.
According to Doug Duncan, senior vice president and chief economist at Fannie Mae, going forward, the wild card will be whether enough sellers enter the market to continue to meet the strong home-buying demand.
“The home purchase market requires the proper mix of home price growth and continued economic recovery to achieve sustainable levels of housing activity,” Duncan.
As of late, both sentiments may be showing confidence. On Oct. 2 the Labor Department reported the unemployment rate hit a six-month low of 7.9% and has continued to decline since April’s 14.7% record spike. According to the HPSI, the percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 78% to 83%.
As for home prices, CoreLogic’s Home Price Insights report revealed prices rising 5.9% year over year in August and estimate another 0.2% increase in September’s report.
Last month’s HPSI mirrored those expectations in housing price gains as the percentage of respondents who say home prices will go up in the next 12 months increased from 33% to 41%, while the percentage who said home prices will go down decreased to 17%. Duncan estimates the upwards pressure on home prices played the leading role in September’s good time to sell/bad time to buy narrative.
In August, Fannie Mae estimated the near-record low mortgage rates drove the HPSI’s recovery – now, 44% of respondents in September’s report believe those numbers will continue to hover in that sweet spot.
However, the percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 17% to 11%.
This time last year, 51% of respondents thought the economy was on the right track – today 40% believe that same sentiment.
For Mark Ross, founder of Ross NW Real Estate and professional real estate broker, real estate has always been the career of choice. During his 25+ years in the industry, Mark has gained experience in....
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