Dive Brief:
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Government-backed lender Fannie Mae’s consumer sentiment index for housing declined for the fourth consecutive month in November, dipping 0.5 points to 81.2 from the month prior and up 0.5 points from a year ago.
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Data collection occurred before and after the U.S. presidential election and so requires caution when parsing, Fannie Mae Chief Economist Doug Duncan said. However, the results show an increase in consumer optimism immediately following the election.
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The share of Americans who expect home prices to continue to edge higher grew four percentage points to 35% in November, reversing a three-month downward trend.
Dive Insight:
The November index also noted that the net share of Americans who say it is a good time to buy a house fell by one percentage point to 30% last month, while the net percentage of those who say it is a good time to sell dropped six percentage points to 13% for the period.
Duncan also cautioned that any growth in the housing sector could be tempered if mortgage rates continue to edge up.
A new report from Black Knight Financial Services found that the recent hike in mortgage interest rates has made U.S. homes less affordable than they were before the election. While the rates are still near historical lows, higher home prices driven by limited inventory and other supply-side headwinds are compounding the effect.
There is also the growing concern that any post-election bounce could be further dampened if the Federal Reserve raises its benchmark interest rates — a move widely expected before the year-end — which could increase mortgage rates and negatively impact homebuilders’ borrowing costs.
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