An insufficient supply of homes for sale, rising interest rates, and high prices sapped home sales in 2018, according to a Fannie Mae survey of mortgage lenders conducted in the fourth quarter.
The surveyed senior mortgage executives said increasing the housing stock and offering consumer subsidies, such as a first-time home buyer tax credit, could improve affordability for low- and moderate-income home buyers.
Fannie Mae’s latest Mortgage Lender Sentiment Survey® (MLSS) included a special section to better understand the drivers behind tepid 2018 home sales growth, as well as ways to improve affordability for low- and moderate-income home buyers. The survey found that 48% of lenders polled said the primary reason for slow home sales growth last year was “an insufficient supply of homes available for sale,” while 24% of lenders tied the slowdown to rising interest rates. 20% said high home prices hurt sales. Only 2% of lenders believed that “insufficient consumer income” was behind the decline in home sales, while another 2% reported that a “lack of mortgage products tailored for first-time buyers or low- to moderate-income families” drove the decline.
When asked for the most helpful idea to improve affordability for low- and moderate-income home buyers, 45% of lenders surveyed cited “increasing the supply of housing stock,” 18% cited “offering consumer subsidies,” and 10% cited “offering more loan choices.”
The subsidies to consumers could come in the form of down payment assistance, assistance for closing costs, or a first-time home buyer tax credit. Increasing the housing stock could be assisted by easing zoning regulations and density restrictions and renovating existing stock.
