The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 0.8 points to 74.7 in November as consumers expressed disparate views of home buying and selling conditions and their greatest economic pessimism in 10 years. Approximately three-fourths of respondents in November reported it’s a good time to sell a home, compared with 29% of respondents who reported it’s a good time to buy a home.
Consumers expressed strong expectations that mortgage rates will increase over the next 12 months and even greater pessimism about the direction of the economy, according to the HPSI. Seven in 10 respondents said the economy is on “the wrong track.” Overall, the full HPSI is down 5.3 points on a year-over-year basis.
“The HPSI experienced some shuffling among its underlying components in November, but the overall index once again stayed relatively flat,” Mark Palim, Fannie Mae vice president and deputy chief economist, says. “While consumers expressed even greater concern regarding the direction of the economy, with the share of respondents expressing pessimism hitting a 10-year high, overall housing sentiment remained stable. Consumers’ concern for their personal job situation have eased, and respondents also reported feeling better about their income level compared to a year ago, with both of those components now nearing their pre-COVID levels.”
The percentage of respondents who say home prices will go up in the next 12 months increased from 39% to 45%. The net share of Americans who say home prices will go up increased 7 percentage points month over month, according to the HPSI. The index also found the net share of Americans who say mortgage rates will go down over the next 12 months decreased 3 percentage points month over month.
“Even though consumers are reporting broader macroeconomic concerns—with much of it likely tied to inflation—so far any negative sentiment tied to the economy has not translated into a meaningful decrease in actual purchase mortgage demand,” Palim says. “According to this month’s survey, an even greater share of consumers expects mortgage rates to go up in the next 12 months, which may be a signal that some households plan to pull-forward their home purchase plans despite growing economic apprehension.”
The HPSI distills information about consumers’ home purchase sentiment from Fanne Mae’s National Housing Survey into a single number, reflecting current views and forward-looking expectations of housing market conditions. The index is constructed from answers to six National Housing Survey questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions.
