Frustrations over the housing market bleed into Americans' view of the economy, survey finds

Gabriella Cruz-Martinez
·Reporter
3 min read
732

It’s not just the housing market that’s depressing Americans. Broader worries about the economy are now weighing on sentiment.

In the latest survey from Fannie Mae measuring housing sentiment, 85% of respondents in October said now is a bad time to purchase a house because of high home prices and high mortgage rates. That marked a survey high.

Their downbeat outlook extended beyond housing, with 78% of respondents saying the economy is on the wrong track, Fannie Mae found. That’s up 7 percentage points from last month, with the vast majority once again saying inflation is the main culprit.

"Consumers expressed even greater pessimism toward the larger economy this month, in addition to their ongoing frustration with the housing market," Fannie Mae chief economist Doug Duncan said in a statement. "We expect this tightness in household finances, along with high home prices and elevated mortgage rates, to prolong the affordability challenges facing many would-be homebuyers."

Read more: Mortgage rates at 20-year high: Is 2023 a good time to buy a house?

'A big constraint'

Only 17% of respondents believe that mortgage rates will go down over the next 12 months, according to Fannie Mae, while 47% expect rates will increase and 36% expect rates to stay where they are.

"Interest rate headwinds have been unfortunate for buyers and we’re seeing a lot of frustration on their end," Robert Dietz, chief economist at the National Association of Home Builders, told Yahoo Finance.

Rates have hovered above 7% since mid-August, a stretch not seen since 2000. And though the 30-year fixed mortgage rate paused its multiweek climb toward 8% last week, "geopolitical uncertainty and continued ambiguity" around the Federal Reserve’s next moves "continue to stall improvements in the housing market," Freddie Mac chief economist Sam Khater said last week.

Elevated rates are also keeping homeowners from selling. More than a third of respondents said it’s a bad time to sell a home, Fannie Mae found.

"Any seller with a 3% rate will look at today’s rates that are more than double — at 8% or more — and they are just not prepared to take on that higher monthly payment," Jeffrey Ruben, president of WSFS Mortgage, told Yahoo Finance. "It’s become a big constraint to inventory and sales."

The continued dearth of resale properties on the market has propped up home prices, increasing affordability challenges. The latest reading on home values showed that prices hit another record high in August, and many Americans expect no relief any time soon.

Read more: How much house can I afford?

Just over three-quarters of survey respondents expect prices to go up or remain where they are in the next 12 months, according to Fannie Mae. Just 23% believe prices will go down in that same period.

"Traditionally when rates go up, prices go down to compensate for that. But when you have restricted inventory, prices aren’t going down, so you just are left hanging in there," Ruben said. "It’s really depressed the market."

Signs stand in front of homes for sale along South St. Paul Street Thursday, Oct. 26, 2023, in southeast Denver. On Thursday, Freddie Mac reports on this week's average U.S. mortgage rates. (AP Photo/David Zalubowski)
Signs stand in front of homes for sale along South St. Paul Street Thursday, Oct. 26, 2023, in southeast Denver. (AP Photo/David Zalubowski) (ASSOCIATED PRESS)

'Consumers are fed up'

That pessimism is also overtaking the bright spots in Americans’ lives. Greater shares of survey respondents felt good about their job security, their income, and the future of their personal finance situation versus the prior month, Fannie Mae found.

Still, 78% of Americans think the economy is going in the wrong direction, up from 71% the previous month. That was also the highest share since June 2022 when 81% of respondents felt that way and the third-highest percentage since March 2011 when the question was first asked.

"Although the labor market is strong and wages have risen in the past year, consumers may believe that their purchasing power has not kept up with prices," Duncan said. "Across all income groups, inflation has consistently driven the 'wrong track' belief since the end of last year, suggesting consumers are fed up with the high prices of many goods and services."

Gabriella is a personal finance and housing reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.

Click here for real estate and housing market news, reports, and analysis to inform your investing decisions.

Advertisement

Recommended Stories

  • Sam Bankman-Fried Traded In His $35 Million Mansion In The Bahamas For A Prison Cell With 35 Inmates But Claims "He Did Not Do Anything Wrong"

    Formerly disgraced FTX CEO and Co-Founder Sam Bankman-Fried was convicted in November of wire fraud, money laundering and conspiracy, and sentenced to 25 years in prison. His high-profile trial marked a significant chapter in the unraveling of FTX, which collapsed under suspicious financial practices, leading to intense scrutiny and legal action. For the first time since his incarceration, Bankman-Fried described his daily life in a detailed interview with journalist William D. Cohan of Puck. Do

  • Charles Schwab website ‘is a mess’: Hundreds of TD Ameritrade users complain about their new online home.

    “It wouldn’t surprise me if they see an outflow of clients over the next six months,” one user told MarketWatch.

  • Homes are overvalued in much of the U.S. — with these 5 states leading the list

    Home prices are overvalued nationally, according to a new report by Fitch Ratings, led by Southern states.

  • Nvidia Recently Bought 5 Artificial Intelligence (AI) Stocks, and 1 Is Absolutely Soaring

    Nvidia is spreading some of its recently amassed wealth by investing in smaller AI companies.

  • Exclusive-Bank of America banker who died had sought to leave, citing long hours, recruiter says

    The 35-year-old Bank of America investment banker who died from a blood clot earlier this month wanted to leave the U.S. bank because he was working more than 100 hours a week, according to an executive recruiter who spoke with him about seeking a new job. Junior banker Leo Lukenas III died of an acute coronary artery thrombus, a type of blood clot, the New York Office of the Chief Medical Examiner said last week. Lukenas said in mid-March that he wanted to leave Bank of America because of the grueling hours, Douglas Walters, a managing partner at GrayFox Recruitment, told Reuters in an interview.

  • Seeking 12% Dividend Yield? Analysts Suggest 2 Dividend Stocks to Buy

    Now that we’ve had time to digest the April jobs numbers, some strategists are getting worried about the economy’s mid-term outlook. The jobs report showed 175,000 new jobs added in the month – but that was the lowest gain in the past six months, and was accompanied by an uptick in unemployment, from 3.8% to 3.9%. Along with these topline numbers, the report showed declines in job openings and hires. For Roukaya Ibrahim, watching the US economy from BCA, this job report may indicate a shift towa

  • The 3M Dividend Cut Is Here. It’s Big.

    Materials company 3M declared a dividend of 70 cents per share on Tuesday evening. The cut means 3M will lose its status as a Dividend Aristocrat—companies that have raised payouts for at least 25 consecutive years. 3M had already told investors a “reset” was coming.

  • Walmart lays off hundreds of employees and requires others to relocate

    Walmart on Tuesday announced layoffs affecting several hundred jobs at the retail giant’s campus offices. It also said it will require most remote workers and personnel in its Dallas, Atlanta and Toronto offices to relocate to its primary offices in Bentonville, Arkansas; Hoboken, New Jersey; and the San Francisco Bay Area. The news, conveyed via a Walmart staff memo provided to The Associated Press, said the relocations will serve the goal of “bringing more of us together more often.”

  • What is a high-net-worth individual?

    High-net-worth individuals, those with net worths of $1 million or more and liquid assets, take different approaches to finance than others.

  • Smartphones Are About to Get an AI Boost. Here Are the Stocks to Play the Revolution.

    “You could almost argue that the smartphone is becoming a little bit closer to a washing machine than the cutting-edge, rapidly changing device category that it used to be,” says Ben Wood, chief analyst at CCS Insight, a technology research firm. Samsung Electronics and Alphabet Google, which have spent years partnering on mobile phones—and the Android software that powers them—see a silver bullet in the form of artificial intelligence. “This new era of AI is a profound opportunity to make smartphones truly smart,” Sameer Samat, Google’s vice president of product management for Android, said during the Google I/O developers conference on Tuesday.