WASHINGTON—The Fannie Mae Home Purchase Sentiment Index (HPSI) increased in January to 77.7, a 3.7 point improvement from December, the agency reported.
Consumers reported a significantly more positive view of home-selling conditions month over month, with that particular component jumping 16 percentage points on net. The other five components remained relatively flat. Year over year, the HPSI is down 15.3 points, Fannie Mae said.
“The HPSI experienced a modest uptick in January, reversing much of December’s decline,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Interestingly, lower-income and renter groups were more optimistic this past month across nearly all of the sentiment index’s components. We will pay close attention to see if this newfound optimism develops into a trend, which could indicate either that some demographics who have been more negatively impacted by the pandemic may be starting to feel the economic recovery or that this is a response to the additional stimulus enacted in December.
The Drivers
“Overall, the index’s monthly increase was driven largely by a substantial jump in the share of consumers reporting that it’s a good time to sell a home, with many citing favorable mortgage rates, high home prices, and low housing inventory as their primary rationale,” continued Duncan. “Among owners and higher income groups, however, the other five components of the index remained relatively flat or slightly negative, suggesting to us that some consumers are waiting to gauge the effectiveness of any new fiscal policies and vaccination distribution programs on both housing and the larger economy.”
The Highlights
Home Purchase Sentiment Index highlights:
• Good/Bad Time to Buy: The percentage of respondents who said it is a good time to buy a home remained unchanged at 52%, while the percentage who said it is a bad time to buy decreased from 39% to 37%. As a result, the net share of Americans who say it is a good time to buy increased 2 percentage points month over month.
- Good/Bad Time to Sell: The percentage of respondents who said it is a good time to sell a home increased from 50% to 57%, while the percentage who said it’s a bad time to sell decreased from 42% to 33%. As a result, the net share of those who say it is a good time to sell increased 16 percentage points month over month.
- Home Price Expectations: The percentage of respondents who said home prices will go up in the next 12 months remained the same at 41%, while the percentage who say home prices will go down increased from 16% to 17%. The share who think home prices will stay the same remained unchanged at 34%. As a result, the net share of Americans who say home prices will go up decreased one percentage point month over month.
- Mortgage Rate Expectations: The percentage of respondents who said mortgage rates will go down in the next 12 months increased to 9% from 8%, while the percentage who expect mortgage rates to go up increased to 45% from 43%. The share who think mortgage rates will stay the same decreased to 37% from 39%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased one percentage point month over month.
- Job Concerns: The percentage of respondents who said they are not concerned about losing their job in the next 12 months remained unchanged at 75%, while the percentage who said they are concerned decreased to 24% from 25%. As a result, the net share of Americans who say they are not concerned about losing their job increased 1 percentage point month over month.
- Household Income: The percentage of respondents who said their household income is significantly higher than it was 12 months ago increased to 21% from 20%, while the percentage who say their household income is significantly lower decreased to 14% from 18. The percentage who said their household income is about the same increased to 64% from 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 5 percentage points month over month.
For more info, click here.