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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 68 February 2025 J O U R N A L adopted a wait-and-see strategy this year. Additionally, a lot of people are taking their time to learn more about the new regulations regard- ing real estate agent fees. "Mortgage rates have already fallen more than one percentage point from their 2024 peak, but we have not yet seen a significant increase in the num- ber of homes changing hands. Of the homes listed this year, many have gone stale because of the lack of demand— especially homes which needed a little extra work," said Elijah de la Campa, Senior Economist at Redfin. "With the majority of homeowners locked into low mortgages, rates will need to keep falling consistently for many to feel comfortable moving on from the deals they secured years ago." Homeowners Reveal Why They're Choosing to Stay Put The most frequently given explana- tion for not wanting to sell is because their house is nearly or fully paid off, as reported by nearly two out of five (39%) homeowners. After paying off their mortgage, homeowners are encouraged to remain in their current residence because they are now free and clear to occupy, with only property taxes and homeowners' association dues to pay. Nearly as many respondents (37%) stat- ed that they had no plans to sell since they just like their house and don't see any need to move. Another important factor inf luenc- ing homeowners' reluctance to sell is affordability. 18% of respondents stated they don't want to give up their cheap mortgage rate, while almost one-third (30%) stated they are staying in their existing residence because current property prices are too expensive. Re- spondents who have owned their house for at least six years and do not plan to sell within the next five years were asked this survey question. Home prices have increased by about 40% since the pandemic began, and the average weekly mortgage rate has increased from less than 4% in 2019 to 6.91%. More than 85% of American homeowners with mortgages have interest rates under 6%, according to a new Redfin analysis. "The just-because movers—those who just want a bigger or nicer house— are staying put, mostly because it's so expensive to buy a new house," said Marije Kruythoff, a Redfin Premier agent in Los Angeles. "The people who are selling are doing so because they need to. Either they're relocating to a different part of the country, or they're moving due to a major life event like having a baby or taking a new job on the opposite side of the city." This report's poll results are from an Ipsos survey that was commissioned by Redfin and administered to 1,802 Americans between the ages of 18 and 65 in September 2024. This study focuses on the 267 homeowners who responded, "You mentioned you have lived in your house for several years and do not plan on selling soon," and the 471 homeowners who responded, "When would you consider selling your current home?" Why do you plan to remain in your present residence? 127 baby boomers (60–65 years old), 203 Gen Xers (45–59 years old), and 141 millennials/Gen Zers (ages 18–43) answered the first question. WILL MORTGAGE RATE OPTIMISM CLIMB IN 2025? D espite a 1.9-point decline in December to 73.1, the Fannie Mae Home Purchase Senti- ment Index (HPSI) was still significant- ly higher than it was a year earlier, part- ly because of continued optimism about mortgage rates. Although December's 42% share was lower than the previous month's 45%, it is still significantly better than last December's 31% share, indicating that a majority of consumers still anticipate mortgage rates to drop over the next 12 months. Similarly, shares that expressed confidence about the state of the home-selling and home-buying markets, respectively, decreased little month over month (MoM), but both components are still up year over year. When compared to this time last year, the HPSI is up 5.9 points overall. "Even though the HPSI fell to end the year, consumer sentiment toward the housing market finished 2024 substan- tially above year-ago levels, attributable in part to respondents' ongoing expec- tations that mortgage rates will decline," said Mark Palim, Fannie Mae SVP and Chief Economist. "However, just over one-in-five consumers believes it is a 'good time' to buy a home—although that share has risen over the last year, too, after reaching an all-time low of 14% in Q4 2023. While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in homebuying sentiment in 2024 may reflect a slow acclimati- zation to the generally less-affordable market conditions." Home Purchase Sentiment Index: Component Highlights The Home Purchase Sentiment Index (HPSI) for Fannie Mae dropped 1.9 points to 73.1 in December. When compared to the same period last year, the HPSI is up 5.9 points. • Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 23% to 22%, while the percentage who say it is a bad time to buy increased from 77% to 78%. As a result, the net share of those who say it is a good time to buy decreased by three percentage points MoM to negative 57%. • Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home de- creased from 64% to 63%, while the percentage who say it's a bad time to sell increased from 35% to 36%. As a result, the net share of those who say it is a good time to sell decreased 2 percentage points MoM to 27%.