A monthly survey of homebuyer sentiment by Fannie Mae found the net share of Americans who think it’s a good time to buy a home fell in September, returning to a record low first seen in July.

But even though most Americans think that sellers have the upper hand, two-thirds said they’d buy a home rather than rent if they were going to move, the survey found.

“Consumers feel it’s a bad time to buy a home but a good time to sell – and they continue to cite high home prices as the primary reason,” said Fannie Mae Chief Economist Doug Duncan, in a statement.

Fannie Mae’s latest monthly National Housing Survey also reveals that a growing number of would-be homebuyers aren’t convinced that home prices will keep going up in the year ahead — a sentiment not shared by professional forecasters.

Only 28 percent of the roughly 1,000 homeowners and renters polled by Fannie Mae in September said it was a good time to buy a home, down from 32 percent in August.

With 66 percent saying it’s a bad time to buy a home, the “net share” who say it’s a good time to buy fell by 7 percentage points from August to September, to minus 38 percent. That ties an all-time low in survey records dating to 2010, previously seen in July.

“Across all consumer segments, renters and younger consumers were slightly more likely to indicate it’s a bad time to buy, perhaps a reflection of their generally lower incomes and their observation that the availability of affordable homes is lacking,” Duncan said.

Most people surveyed — 74 percent — agreed that it’s a good time to sell a home. With the percentage who think it’s a bad time to sell unchanged from August at 19 percent, the net share who say its a good time to sell increased in September to 55 percent.

If they were going to move, 67 percent of those surveyed said they’d buy a home, rather than rent. That’s a 3 percentage point drop from August. And while only 28 percent said they’d rent, that’s up from 24 percent in August.

The net share of Americans who think home prices will go up in the next 12 months decreased by 3 percentage points, continuing a decline seen over the last several months. Only 37 percent of those surveyed thought home prices have more room to run, down from 50 percent in March. Only one in four people (24 percent) think home prices will fall in the next 12 months, while 33 percent think they’ll stay the same.

“We’re … seeing a softening in consumers’ expectations that home prices will continue to increase; however, in our view, other housing market fundamentals remain supportive of further home price appreciation – including low levels of inventory and low interest rates,” Duncan said.

The net share of Americans who expect mortgage rates will go down over the next 12 months was up 4 percentage points from August to September. While 51 percent of those surveyed said they expected rates to go up, that’s down from 53 percent in August. Only 8 percent expect rates to go down, while 33 percent expect them to stay the same.

The survey found most Americans — 82 percent — aren’t concerned about losing their job in the next 12 months. But with the percentage who say they are concerned rising to 16 percent, the net share of Americans who feel secure in their jobs fell by two percentage points from August to September.

If most Americans aren’t expecting home prices to keep going up, they could be in for a surprise a year from now.

Annual home price appreciation, by quarter

Annual home price appreciation, by quarter. Third quarter of 2021 and beyond are projected. Source: FHFA Purchase-Only Index, Fannie Mae projections. Fannie Mae Economic and Housing Outlook, September 2021.

In their most recent economic and housing forecast, economists at Fannie Mae said they expect home price appreciation will cool next year, but not grind to a halt.

In a similar vein, the 41 percent of Americans who think mortgage rates will stay the same or decline in the next 12 months could also be disappointed.

Fannie Mae mortgage rate forecast

Average rates for 30-year fixed-rate loans by quarter. Third quarter of 2021 and beyond are projected. Source: Fannie Mae Economic and Housing Outlook, September 2021.

In September, Fannie Mae economists predicted a gradual rise in mortgage rates next year, to an average of 3.2 percent during the fourth quarter.

That forecast was issued before the Federal Reserve signaled that it could start tapering its purchases of mortgage-backed securities as soon as November — news that prompted a runup in mortgage rates.

The good news for many homebuyers is that the conforming loan limit for Fannie Mae and Freddie Mac is expected to increase by at least $75,000 in 2022, to $625,000 or more.

That means more homebuyers will qualify for conforming mortgages, rather than “jumbo” loans that can be harder to qualify for and carry higher interest rates.

Email Matt Carter

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