Americans haven’t felt this optimistic about the housing market in nearly two years, but it’s home sellers who have anything to be happy about.
Fannie Mae’s gauge on housing sentiment increased slightly in February, marking the third consecutive month of improved confidence and the highest level since March 2022. The boost was driven by increased optimism among home sellers as market conditions continued to tip in their favor.
In fact, some 65% of consumers surveyed by Fannie Mae said it was a good time to sell, up from 60% in January. But that was countered by would-be buyers, who remain extremely pessimistic, with just 17% saying it was a good time to buy.
While would-be buyers remain in low spirits due to woefully low inventory levels and climbing borrowing costs, the uptick in seller confidence could be a sign of more inventory popping up come spring.
“Some home sellers will begin to list properties when mortgage rates come down,” Lawrence Yun, chief economist at the National Association of Realtors, told reporters last month. “But we are not yet out of the woods.”
Read more: Mortgage rates hover around 7% — is this a good time to buy a house?
Climbing rates subdue buyer confidence
Would-be buyers just can’t shake off the burden of climbing borrowing costs, and it’s curbing their confidence.
After falling more than a full point from October’s peak, rates kicked off the year at a low of 6.62% — but the dip didn’t last. The popular 30-year fixed rate rebounded to 6.94% by the end of February, according to Freddie Mac.
And there’s no telling if rates will climb further in the weeks to come.
The national median list price also increased seasonally to $415,000 in February, up from $409,500 the month prior. According to Realtor.com, that uptick, in tandem with higher mortgage rates, increased the required annual household income to purchase an average home by $4,400 to $86,100 — before taxes and insurance.
