As rate hikes ease and growth in home prices slows, Americans are gradually becoming more confident about their purchasing power in the real estate market, according to Fannie Mae’s newest monthly consumer housing survey. And though this shift is relatively small now, economists are hopeful that it foreshadows a larger, more positive turn in consumer sentiment.
The share of Americans who say now is a good time to buy a home increased 4 percentage points month over month to 15 percent in January, according to Fannie Mae’s survey. Since last summer, growth in home prices has decreased to the slowest pace in more than six years, real estate data firm CoreLogic reported this week. Thirty percent of consumers now say they think home prices will fall in the near future—which is still down 22 percentage points from a year ago, according to Fannie Mae.
Nonetheless, consumers appear to have a more favorable perception of housing affordability, which may give more potential buyers motivation to purchase. Americans also say they’re feeling more financially stable, with the share of households who say their income has risen “significantly higher” over the last year increasing 7 percentage points to 27 percent in January, Fannie Mae’s survey shows. That’s 11 percentage points higher than a year ago. “Overall, these results are in line with our forecast that, amid improving affordability conditions, home prices should stabilize in 2019 after declining last year for the first time in four years,” says Doug Duncan, Fannie Mae’s chief economist.