MW Home buyers are fed up with high mortgage rates, Fannie Mae says

By Aarthi Swaminathan

Nearly 8 in 10 respondents to Fannie Mae's survey said it was a bad time to buy a home

Mortgage rates have remained high for so long that some home buyers are getting fed up ahead of a key season for the real-estate industry.

Housing sentiment dropped on an annual basis in February for the first time in two years as consumers grew more pessimistic about mortgage rates falling in the next 12 months, according to a new survey by Fannie Mae.

In February, ahead of the spring home-buying season, which is typically the industry's busiest period, buyers grew more pessimistic about interest rates.

The share of respondents who said they expect mortgage rates to go down in the next 12 months fell to 30% from 35% the previous month, according to the monthly survey by housing-finance giant Fannie Mae (FNMA).

"This growing pessimism makes sense, as mortgage rates had remained near the 7% threshold for a few months, including when we fielded this survey," Mark Palim, chief economist at Fannie Mae, said in a statement.

That dragged down the overall sentiment toward housing. Fannie Mae's Home Purchase Sentiment Index fell in February by 1.2 points from a year ago. The last time the index fell on a year-over-year basis was in 2023.

Nearly 8 in 10 respondents, or 76%, said that it was a bad time to buy a home, according to the survey, while only 24% said that it was a good time to buy.

The median price of an existing home in January was $396,900, according to the National Association of Realtors. The median price of a newly built home in January was $446,300,

"While some consumers may be slowly acclimating to the higher mortgage rate environment, the vast majority continue to believe it is a 'bad time' to buy a home - with high home prices cited as the primary sticking point," Palim said.

As a result, people should expect home sales to be "relatively light" for the foreseeable future "due to the ongoing lack of supply and overall unaffordability," he said.

The survey respondents were still broadly more optimistic about the housing market than they were back in 2022 and 2023.

Home buyers and sellers are getting used to the higher postpandemic interest-rate environment, Palim told MarketWatch in an interview.

"Going into the spring market, I see a consumer that is ... accepting of being in this area between 6% and 7%," he added, referring to the 30-year mortgage rate.

And home buyers might start to view the market differently over the coming weeks.

Although the 30-year mortgage rate has been averaging close to 7% throughout the first part of the year, in early March, the 30-year posted a "beautiful" drop, as noted by President Donald Trump.

As the financial markets digested policy changes from the administration, they channeled capital into relatively safer Treasury bills, pushing down the 10-year Treasury note, and the 30-year mortgage rate moved down along with it.

The 30-year fixed-rate mortgage averaged 6.63% as of March 6, according to data from Freddie Mac (FMCC).

-Aarthi Swaminathan

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March 07, 2025 10:11 ET (15:11 GMT)

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