Homebuyer confidence for purchasing a home increased slightly in January, according to Fannie Mae‘s Home Purchase Sentiment Index (HPSI). The HPSI increased 0.3 points to 73.4 in January and is now 2.7 points higher than it was a year ago.
The share of respondents who believe it’s a good time to sell a home remained unchanged from December at 22%. But that only represents part of how consumers feel about market conditions. Higher mortgage rates and home prices are still keeping many buyers and sellers away from the market, according to Fannie Mae.
“Consumers seem increasingly pessimistic that housing affordability conditions will improve across the board, as a growing share expects home prices, rent prices, and mortgage rates will all go up,” Kim Betancourt, the company’s vice president of multifamily economics and strategic research, said in a statement.
“The lower optimism toward the mortgage rate outlook was largely expected, as rates have continued to stay elevated and even crossed the 7% threshold in mid-January. We currently expect mortgage rates to end 2025 around 6.5%, relatively little changed from where we are today, which will likely continue to hinder relief for housing affordability and home sales activity,” she added.
Mortgage rate optimism — measured by the share of respondents who expect rates to drop — declined from 42% in December to 35% in January. The portion of respondents who expect rates to increase ramped up, growing from 25% to 32%.
Respondents also worried about rising rent prices, according to Fannie Mae, and recent forecasts from the organization echo that belief.
“On the rental side, consumers have indicated a sharply growing expectation over the past two months that rent prices will increase. This mirrors our expectation that multifamily rents will grow between 2.0% and 2.5% this year — up from an estimated 1.0% last year. Even though it remains relatively cheaper for consumers to rent than buy in nearly every U.S. metro, we expect housing affordability issues will remain a real challenge for both renters and homeowners alike for the foreseeable future,” Betancourt said.
Respondents were also apprehensive about home prices. The share of respondents who expect prices to increase this year increased to 43%. Conversely, the share of respondents who believe prices will go down decreased to 22%. About one in three respondents don’t foresee any price increases.
Despite concerns over mortgage rates and home prices, most respondents weren’t overly concerned with factors like job losses and changes in household income.
