Homebuyer sentiment remained subdued in September despite a drop in mortgage rates, with nearly three-quarters of consumers saying it’s a bad time to buy a house.
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.
Asked about buying conditions, 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’s a good time to sell, compared with 41% who said it is a bad time to sell.
Outlook on mortgage rates was nearly evenly split, with 32% predicting mortgage rates will fall over the next 12 month, and 30% expecting those rates to rise.
After three straight years of mortgage rates averaging above 6%, financing costs have become a major issue for buyers, combining with record-high 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 hitting a one-year low, according to Freddie Mac.
“While mortgage rates have softened, the decline hasn’t been large enough to reignite buyer confidence—even with lower rates, elevated home prices still make homeownership unattainable for many,” says Realtor.com® Economist Jiayi Xu. “Moreover, a rebound in homebuying sentiment also depends on income growth and job security—both of which show no improvement compared with a year ago.”
Mortgage rates have since climbed off their September lows, despite the Federal Reserve’s interest rate cut last month, showing that homebuyers are justified in their uncertainty over the future path of mortgage rates.
Fannie Mae’s own economists predict mortgage rates will end 2025 at around 6.4%, and finally fall below 6% at the end of 2026, reaching 5.9%.
Meanwhile, affordability remains a challenge for many buyers. Although prices for newly built homes have been tapering down from their peak 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 that home prices would continue to go up over the next 12 months, while 22% said they expected home prices to fall.
Prices have softened in some markets, with Case-Shiller data from July showing that single-family sales prices are 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 cut, according to the Realtor.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 Trump‘s tariffs play out, and the ongoing federal government shutdown adding a new wrinkle for the economy.
In September, as the threat of the shutdown loomed, most consumers (75%) said they were not concerned about losing their job over the next 12 months, while just 25% expressed concerns about layoffs.
Respondents were also cautiously optimistic about income, with 14% saying they expected their household income to rise significantly in the next year, while 8% expected a significant decline.
