Consumer confidence in the housing market climbed to its highest level this year as Americans relay feeling more hopeful about real estate and the direction of mortgage rates, according to Fannie Mae’s latest National Housing Survey released Monday.
Five of six factors included in Fannie Mae’s Home Purchase Sentiment Index (HPSI) improved in May; only household income sentiment retreated. The HPSI reached 73.5 in May, up 4.3 points from April, besting 2025’s previous high reading of 73.4 in January.
Only 26% of consumers said it was a good time to buy a home in May, but that’s up from 23% month-over-month and 14% a year ago—an all-time survey low. Meanwhile, 74% of consumers said it was a bad time to buy, down 3 percentage points from the previous month.
The survey, conducted from May 1 through May 20 with 1,345 household financial decision-makers, revealed that most Americans are still wary of buying a home right now as mortgage rates hover near 7% and home prices remain elevated.
However, buyers and sellers say their outlook is perking up.
Nearly two-thirds (61%) of consumers said May was a good time to sell, up from 58% in April but down from 64% a year ago. While the share of consumers who said it was a bad time to sell reached 38% in May, down from 41% in April, the net share of consumers who say it’s a good time to sell rose 6 percentage points to 23% in May.
Purchase intent among prospective buyers remains strong, with 68% of potential movers saying they’d prefer to buy a home rather than rent, though 55% still view obtaining a mortgage as difficult.
More household decision-makers (45%) expect home prices to move up over the next year, while 34% expect them to stay the same. Consumers aren’t anticipating much relief on home prices, either, with a 3.1% bump in home prices, on average, over the next year. That’s up 0.9 percentage points over the previous month and is the highest level since February 2022.
Meanwhile, consumers think rents will climb by 6.6%, on average, up 0.2 percentage points from April, Fannie Mae reported.
Mortgage rate, economic outlook shows cautious optimism
The net share of consumers expecting mortgage rates to drop improved 7 percentage points to -2% in May. This marks the first monthly increase in the net share of consumers expecting lower mortgage rates since November 2024’s survey high. Though still negative, it’s an improvement from the less-rosy outlook consumers have had in recent months.
Among respondents, nearly one-third (29%) expect interest rates to fall, while 32% anticipate them to go up over the next year.
Job security concerns continued to ease, with most employed respondents (76%) expressing confidence about keeping their jobs over the next 12 months, up 5 percentage points from April to May.
On the other hand, views on income growth were less optimistic.
While 70% of consumers reported their household income remained about the same as a year ago, 10% reported significantly lower incomes, up from 8% in April but down from 12% in 2024. The net share of consumers who reported having a higher income in May than the previous 12 months was 9%, sliding 3 percentage points from April.
Although it’s not part of the HPSI, the survey revealed that consumers were more hopeful about the economy, with 36% saying the economy is on the right track in May, up 4 percentage points from April. However, most consumers (64%) believe the economy is headed in the wrong direction, though that sentiment is down slightly from 67% in April and 74% a year ago.
