Consumers ended 2024 feeling a lot better about the housing market than they did a year ago, based largely on the hope that mortgage rates would decline through 2025 and help make it more affordable to buy a home. But that doesn’t mean they are racing to buy their next property.
“Just over one-in-five consumers believes it is a 'good time' to buy a home – although that share has risen over the last year, too, after reaching an all-time low of 14% in Q4 2023,” says Fannie Mae’s senior vice president and chief economist Mark Palim.
“While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in home buying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions.”
The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 1.9 points in December to 73.1. The index showed that 42% of consumers expect mortgage rates to move lower in 2025, compared to 31% a year ago.
Meanwhile, the number of homes for sale in December increased 22% compared to December 2023, according to the December Monthly Housing Trends Report from Realtor.com. Inventory is still inching its way back to 2017-2019 levels as homes spent 70 days on the market in December, the slowest pace in five years.
Out of the 50 largest metros, 46 saw time on market go up in December. Specifically, Nashville, Tennessee (+22 days); Orlando, Florida (+21 days); and Rochester, New York (+21 days) saw the greatest increase in time on the market in December. Even with the increase, across the country, each of the regions are still seeing time on the market below pre-pandemic levels, South (-4 days), Midwest (-17 days), and Northeast (-19 days), with the exception of the West, which is seeing time on the market more closely mirror pre-pandemic levels (+1 day).
