Fannie Mae’s chief economist, Doug Duncan, attributed this decline to seasonality.
“The modest decrease in October’s Home Purchase Sentiment Index is … a shift we expect at this time of year moving out of the summer home-buying season,” said Duncan.
While seasonality is certainly a factor in sentiment, the dynamics of today’s market may finally be taking their toll as well. Real estate agents nationwide are reporting increased frustration among buyers who either can’t find a home that suits their needs, or, more likely, can’t afford one that does. They are also concerned that mortgage rates, which have remained stubbornly low all year, may start to rise in the coming months, dampening affordability.
Meanwhile, sellers are worried that they may not be able to find another home to buy. Even if they can sell their home quickly, they need to live somewhere. They are also starting to see price pushback in the market, especially in areas that are overheated.
While home prices continue to soar, rents, which had been overheating, are now cooling. CoreLogic’s single-family rent index is up just 3 percent annually, less than half that of home prices.
While homeownership generally has been considered cheaper than renting, that is shifting quickly. Owning a home and building equity just narrowly outpaces renting a comparable property and investing in stocks and bonds, an index from Florida Atlantic University shows.
Four cities — Miami, Pittsburgh, Portland, Oregon, and Seattle — are beginning to look better for renting, according to the FAU report. Only Detroit, New York and St. Louis trended more toward ownership, according to the report.