iStock image

While the Northeast region remains a strong market for sellers, the overall sentiment of homebuyers remains skeptical even with the potential for lower interest rates.

According to a new report from Fannie Mae, a survey-high 39 percent of survey respondents said they expect mortgage rates to decline in the next 12 months, up from 29 percent the month prior. This compares to 35 percent who expect mortgage rates to stay the same and 26 percent who expect rates to increase.

While interest rate shifts might increase in listings, only 17 percent of survey respondents believed it’s a good time to buy a home.

“Despite significantly greater optimism that mortgage rates and home prices will move in a more favorable direction for potential homebuyers, most consumers remain apprehensive about the housing market and continue to point to the lack of affordability and supply as the chief reasons for their pessimism,” Mark Palim, Fannie Mae vice president and deputy chief economist, said in a statement. “On a national level, housing sentiment was largely unchanged in August despite some positive developments for affordability, including a meaningful decline in actual mortgage rates and an uptick in home listings in certain markets, particularly in the Sunbelt.”

But survey respondents believed that it is a great time to sell a home as 65 percent believe it is a good time to sell a home. In the Northeast region, 80 percent of survey respondents said it is a good time to sell. This is the highest regional percentage with the Midwest (70 percent), and West (66 percent) trailing behind. The Southeast region actually saw a 5 percentage decline month-over-month with only 56 percent of respondents saying that it is a good time to sell.

“This likely reflects in part the wide geographic variation in new home construction activity,” Palim added. “In the regions that had a stronger construction response following the pandemic, our latest survey data suggest that sellers may be losing some of their negotiating power due to the increased supply.