After plunging in April, consumer sentiment in housing began a promising recovery.
Home sales surged and beat expectations; homebuilders reported buyer traffic was, well, through the roof, and online housing-related searches soared.
Consumer confidence in housing now appears to be weakening, but consumer curiosity is not.
Fannie Mae’s monthly Home Purchase Sentiment Index fell back in July. The percentage of respondents who said it was a good time to buy a home decreased from 61% to 53%. Those who said it was a bad time to buy increased from 27% to 38%.
Some of the drop can be attributed to a rise in Covid-19 cases in July and growing concern over more parts of the economy shutting down again. Home prices were also a factor.
“Supply constraints appear to be applying upward pressure to consumers’ home price expectations, which in turn has contributed to both a sharp reversal in optimism about whether it is a good time to buy a home and further improvement in home-selling sentiment,” said Doug Duncan, chief economist at Fannie Mae.
Despite the decline in confidence, consumers are still much more interested in all facets of the housing market. The pandemic has both increased and altered demand for housing, and it has also helped push mortgage rates to record lows.
No surprise, Google searches for “Refinance home loan calculator” jumped nearly 4,000% last week, according to Google Trends. This as news hit of another record low on the 30-year fixed — and, of course, searches for, “How low will mortgage rates go?” quadrupled.
There is also more evidence of a surge of interest among first-time homebuyers. Searches for “Process of buying a house” jumped 950%, and “Minimum credit score to buy a house” was also popular. Recent home sales numbers have showed an uptick in the share of first-time buyers in the market.
Some consumers, however, are stretching their finances to make that purchase. Searches for “Can you use your 401(k) to buy a house?” were up 2,800% in the past three months. Low supply and high demand has heated up the competition this summer, and competition was already fierce before the pandemic struck.
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Owning a home and dealing with mortgage is something that many Americans have to live with!
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