Fannie Mae's Home Buyer Sentiment Index rose slightly in December by 3.7 points to 61, the company said on Monday. the index hit an all-time low in October.
In December, 21 per cent of the 1,000 respondents to the survey said they thought now was a good time to buy.
Last month, only 16 per cent said it was a good time to buy a home.
said Doug Duncan, senior vice president and chief economist at Fannie Mae.
Despite the slight improvement, [the index] remains low by historical standards, especially in the good time to buy section, where respondents continue to cite high home prices and unfavourable mortgage rates as the main reasons for their pessimism.
Home prices remain high, mortgage rates are holding steady at over 6% and high interest rates are adding hundreds of dollars to buyers' monthly budgets.
But buyers are beginning to feel more optimistic about the future. According to the Fannie Mae survey, the percentage of respondents who said mortgage rates will fall in the next year increased from 10 per cent to 14 per cent.
Homebuyers also expressed confidence that home prices could also fall. The proportion of respondents who believe that house prices will fall in the coming year rose from 34% to 37%.
However, even if interest rates and home prices fall, "as we move into 2023, we expect affordability to remain the primary challenge for potential homebuyers," Duncan said, as these two factors may not be enough "to generate sufficient purchasing power."
Sellers, on the other hand, are feeling more desperate about the housing market.
According to Fannie Mae, the percentage of respondents who said it was a bad time to sell their homes increased from 39 per cent to 42 per cent.
Many current homeowners "will likely continue to wait to list their homes because many have locked in lower mortgage rates and there is little incentive to sell and buy again until rates are more favourable," Duncan noted.
He added that we believe the resulting tension will contribute to a continued decline in home sales in the coming months.
