“Homeowners sharing this belief frequently cited ‘unfavorable mortgage rates’ as the primary reason for their pessimism, further corroborating the often-discussed disincentive – or ‘lock-in effect’ – that many mortgage holders who may be considering moving have toward giving up their lower rates,” Palim said.
Mortgage rates have been trending down as the market enters the traditional homebuying season, but economists, including Freddie Mac‘s chief economist Sam Khater, note that buyers are facing a number of challenges, including a low inventory of homes for sale and affordability issues.
On the buyer side, 20% said it was a good time to buy in March, which remains unchanged from February. The majority of buyers who said it was a bad time to buy also remained steady from the previous month at about 79%.
On the seller side, 58% said it was a good time to sell, an increase from 54% in March. About 40% said it’s a bad time to sell, a decrease from 34% in the previous month.
Consumers also expressed apprehension about the direction of home prices.
There was an even split among respondents who said home prices will go up over the next 12 months compared to those who expect them to go down.
The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 15% to 12%, while the percentage who expect mortgage rates to go up decreased from 55% to 51%.
“With affordability constraints, the lock-in effect, and home price direction uncertainty weighing heavily on consumers’ minds, we maintain our forecast that total home sales for the year will remain subdued,” Palim said.
Total existing home sales are expected to drop to 4.2 million in 2023 from 5.1 million in 2022, and new home sales are expected to decline to 620,000 from 643,000 during the same period, according to the latest Mortgage Bankers Association’s mortgage finance forecast.
Source: housingwire.com