Renters and homebuyers began the year pessimistic about home affordability, according to Fannie Mae.

While attitudes about the market among surveyed consumers modestly improved overall last month, “a growing share expects home prices, rent prices and mortgage rates will all go up,” Fannie Mae reported Friday.

“Consumers seem increasingly pessimistic that housing affordability conditions will improve across the board,” said Kim Betancourt, vice president of Multifamily Economics and Strategic Research.

Fannie Mae’s Home Purchase Sentiment Index bounced back slightly in January, rising 0.3 points, indicating a marginal improvement in how homebuyers and home sellers view market conditions.

Every month, Fannie Mae conducts a telephone survey of 1,000 consumers across the country.

Just 22% of respondents said it was a good time to buy a home, and 78% indicated it was a bad time to buy.

On the flip side, 63% of respondents said it was a good time to sell a home, while just 36% said it was a bad time to put a house on the market.

 January saw a large decline in the net share of consumers who believe mortgage rates will go down. Just 35% indicated they expect rates to drop and another 33% indicated rates would stay at the current elevated level.

Betancourt called rising pessimism about rates “largely expected,” given the 30-year fixed rate surpassed the 7% threshold last month before dropping in recent weeks. Fannie Mae is forecasting that mortgage rates will end the year around 6.5%, down only slightly from current levels.

On the rental side, 65% share of respondents expect rents to increase this year.  Betancourt said this reflects the reality of rising prices in U.S. cities. Fannie expects rents to increase in the range of 2% to 3% this year.

“Even though it remains relatively cheaper for consumers to rent than buy in nearly every U.S. metro, we expect affordability issues will remain a real challenge for both renters and homeowners alike for the foreseeable future,” she said.