Homebuyer sentiment remains muted as most say it’s still a bad time to buy

Homebuyer sentiment remained subdued in September despite a decline in mortgage rates, with nearly three-quarters of consumers saying it is a bad time to buy a home.

Overall consumer sentiment toward housing as measured by Fannie Mae’s Home Purchase Sentiment Index Was at 71.4 last month, unchanged from August but down 2.5 points from a year ago.

When asked about purchasing terms, 73% said it was a bad time to buy, versus just 27% who said it was a good time to buy.

However, consumers remained more optimistic about selling a home, with 57% responding that it is a good time to sell, compared to 41% who said it is a bad time to sell.

Mortgage rate outlooks were almost evenly split, with 32% predicting mortgage rates will fall over the next 12 months and 30% expecting those rates to rise.

After three consecutive years of mortgage rates above 6%, financing costs have become a major problem for buyers, combining with record home prices to price many buyers out of the market.

Rates on 30-year fixed mortgages averaged 6.35% in September, down from 6.59% in August and a one-year low, according Freddie Mac.

“While mortgage rates have softened, the drop hasn’t been big enough to recalculate buyer confidence – even with lower rates, increased home prices still put homeowners out of reach for many,” says REALTOR.COM® Economist Jiayi Xu. “Additionally, a rebound in homebuying sentiment also depends on income growth and job security – neither of which show any improvement compared to a year ago.”

Mortgage rates have since risen from their September lows despite the Federal Reserve’s rate cut last month, showing that homebuyers are justified in their uncertainty about the future path of mortgage rates.

Fannie Mae’s own economists predict that mortgage rates will end 2025 at around 6.4%, eventually falling below 6% by the end of 2026, to 5.9%.

Meanwhile, affordability remains a challenge for many buyers. Although prices for newly built homes will taper off their peaks in 2022, with many homebuilders offering price cuts and incentives, existing home prices continue to march higher.

The national median sales price for existing homes sold in August was $422,600, up 2% from a year earlier, while the typical new home sold for $413,500.

In the new survey, more consumers (40%) predicted house prices would continue to rise over the next 12 months, while 22% said they expected house prices to fall.

Prices have softened in some markets, with case shiller data from July showing single-family home sales prices falling annually in seven major cities in the South and West.

Nationally, nearly 20% of homes for sale in September had price reductions, with sellers between $350,000 and $500,000 most likely to reduce prices, according to the Economic.com Economic Research team’s monthly trends report.

Economic uncertainty also remains a headwind for the housing market, as the full effects of President Donald TrumpTariffs are playing out and the ongoing federal government shutdown is adding another wrinkle to the economy.

In September, as the threat of the shutdown emerged, most consumers (75%) said they were not worried about losing their jobs in the next 12 months, while only 25% expressed concern about layoffs.

Respondents were also cautiously optimistic about income, with 14% saying they expected their household income to increase significantly in the next year, while 8% expected a significant decrease.