Mortgage rates did decline rather precipitously during December, from an average 4.85 percent on the 30-year fixed at the start of the month to 4.61 percent on New Year’s Eve, according to Mortgage News Daily. Still, the expectation in financial markets is that mortgage rates will rise throughout 2019, and the December drop was just a temporary correction. Rates are still higher than they were one year ago.
“Consumer attitudes regarding whether it’s a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Although home price growth slowed in 2018, the cumulative impact of sustained, robust increases in home prices outpacing income growth likely helped drive the share of consumers citing high home prices as a primary reason for a bad time to buy a home to a survey high.”
Consumers are also less bullish on the direction of the economy. The share of those who said their household income was significantly higher than a year ago fell compared with November, although it was up slightly from a year ago. Consumers are, however, quite confident about employment. A full 79 percent said they were not concerned about losing their jobs in the next year, up 11 percentage points from a year ago.
Sales of both new and existing homes flatlined last year, as affordability took its toll on potential buyers. The combination of higher rates and overheated home prices over the last two years made buying increasingly difficult, especially for first-timers who need to save for a down payment. The rise in mortgage rates also kept more potential sellers from moving up or down, as they were likely unwilling to trade in their rock-bottom rate. That kept supplies low. The slowdown in sales may actually help the health of the housing market this year.
“Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability,” Duncan said.
That will depend, however, upon how many current homeowners decide to put their homes on the market this spring. Just 36 percent of those surveyed said now is a good time to sell a home.
from Update News Zone http://bit.ly/2VxS9M4
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