WASHINGTON—Increased optimism around home selling conditions helped to push up the Fannie Mae Home Purchase Sentiment Index (HPSI) by 2.1 points in February to 72.8, inching higher for the third consecutive month, Fannie Mae said.
In February, 65% of consumers said it was a good time to sell a home, up from 60% last month. The share of those who believe it’s a good time to buy a home ticked up slightly this month but remains at an extremely pessimistic 19%.
Additionally, a plurality of consumers continues to believe that mortgage rates will go down over the next 12 months, although on net that component fell slightly this month. Overall, the full index is up 14.8 points year over year, Fannie Mae said.
‘Slow but Steady Rise’
“The HPSI increased for the third straight month, continuing its slow but steady rise from the low-level plateau observed through much of 2023; and consumer sentiment toward housing now rests firmly above where it was this time last year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Consumer attitudes toward home-selling conditions increased markedly in February, with current homeowners, in particular, expressing greater optimism that it’s a ‘good time to sell,’ a development that may foreshadow an upcoming increase in existing home listings.
Potential ‘Further Thawing’
“Additionally, despite the recent uptick in rates, consumers remain relatively optimistic that mortgage rates will decrease over the next 12 months,” continued Duncan. “If their expectations come true and rates move closer to the 6%t mark by the end of 2024, as we currently expect, then it’s likely that consumer sentiment on both sides of the transaction will improve, perhaps leading to a further thawing of the housing market. A decline in mortgage rates – and the resulting uptick in sentiment – would obviously bode well for the upcoming spring homebuying season, although affordability will likely remain a significant challenge for buyers, at least until there’s a meaningful addition to net supply.”
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