Americans Less Optimistic About Home Buying

Americans’ optimism about buying a home declined for the first time in five years, as rising interest rates and home prices deterred more people from making the decision to become homeowners, Fannie Mae said. The No. 1 buyer of home mortgages in the U.S., in its annual survey of consumers’ attitudes about the housing market, also said half of those surveyed believe that most mortgage transactions will be done over the Internet by 2005. The survey found that 19% said it’s a very good time to buy a home, down from 39% who felt that way a year earlier, while 55% said it’s a somewhat to very good time to buy, down from 67%. The percentage of those in the first category is the lowest since 18% in 1995. The falling optimism comes after the Federal Reserve raised the benchmark interest rate six times between June 1999 and May of this year to 6.5%, the highest in nine years, to cool economic growth and keep a lid in inflation. Mortgage rates followed, rising to a five-year high of 8.64% for 30-year loans in May. The rate has since retreated to below 8%. Overall, the 1,647 people surveyed in early July were still upbeat about their finances as the economy keeps growing for a record 10th year and unemployment remains near a 30-year low.