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Pessimism about rising mortgage rates drove down the March Fannie Mae Home Purchase Sentiment Index (HPSI) for the first time since November. The index ticked down 0.9 points to a reading of 71.9 in March. The full index is up 10.6 points on a year-over-year basis.

Around a third of consumers surveyed by Fannie Mae believe mortgage rates will go up over the next 12 months, while just 29% believe rates will decline in the same period.

“Consumers took a slightly more pessimistic view on the likely direction of mortgage rates, likely reflecting the fact that actual mortgage rates have moved upward since the start of the year,” says Fannie Mae senior vice president and chief economist Doug Duncan. “With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year’s share jump in rates, an adjustment that we think could help further thaw the housing market.”

While consumers are more pessimistic toward rates, perceptions of both buying and selling conditions increased again in March. Consumer attitudes toward home buying and selling have risen for multiple months in a row, according to Fannie Mae.

“The HPSI remained relatively flat in March, but we’re seeing signs that consumers may be adjusting their expectations for the housing market to better accommodate the higher mortgage rate and home price environment,” Duncan says. “Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month.”

The percentage of respondents who believe it is a good time to buy a home increased to 21%, while the share who believe it is a bad time to buy decreased to 79%. Two-thirds of respondents believe it is a good time to sell a home, while one-third say it is a bad time to sell.

“We noted in our latest monthly forecast that we expect to see a gradual increase in home listings and sales transactions in the coming year,” Duncan says. “We believe this will be driven not only by those coming off the sidelines due to rate-related recalibration, but also by households who may need to move for other life reasons.”

The percentage of respondents who believe home prices will increase in the next 12 months decreased to 40% from 42%, while the share who believe prices will go down decreased to 20% from 23%. The share of consumers who believe their household income is significantly higher than a year ago was unchanged at 19%. The share of respondents not concerned about losing their job in the next 12 months decreased to 77% from 78%.