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annie Mae's latest consumer sentiment survey reveals a decline in optimism about the housing market, driven by concerns over mortgage rates. Despite recent rate drops, consumers are skeptical that this trend will continue. The housing sentiment index fell 1.8 points to 71.6, marking the first year-over-year drop since 2023.

    Consumers remain pessimistic about buying a home, with most believing it's a "bad time" due to high mortgage rates and unaffordability. Mark Palim, Fannie Mae's chief economist, notes that home sales activity will likely remain light due to supply shortages and affordability issues.

    The survey also shows consumers are uncertain about selling their homes, with the net share of optimists dropping three points to 25%. This comes amidst broader economic uncertainty, including tariffs, federal job cuts, and stock market declines.

    Key findings from the survey include:

    * One-third of respondents expect mortgage rates to rise in the next 12 months, while 30% believe they will decrease.

    * Job-loss concerns rose slightly from 22% to 23%, but income expectations improved, with 18% expecting an increase.

    * Concerns about income taking a hit increased from 9% to 11%.

    * Consumers are growing more confident that home prices will drop in the coming months, rising one percentage point to 23%.