The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index (HPSI) remained mostly flat in December, increasing 0.2 points to 91.7 and inching nearer the survey high set in August. The HPSI is up 8.2 points compared to the same time last year.
Three of the six HPSI components increased month over month, including the percentage of Americans who believe that home prices will go up over the next 12 months, which rose from 44% to 50%. Year over year, the HPSI is up 8.2 points, driven primarily by consumers’ favorable mortgage rate expectations and a growing share reporting it’s a good time to buy a home.
During much of 2019 consumers reported being held back by high home prices and the shortage of houses available for purchase. However, partly in response to evidence from the HPSI demonstrating strong consumer sentiment, Fannie Mae’s most recent macroeconomic outlook incorporated upgrades to the 2020 forecasts for single-family housing starts, new home sales, and mortgage originations.
“The continued strength in the HPSI attests to the intention among consumers to purchase homes. This is consistent with the Fannie Mae forecast for 2020,” said Doug Duncan, senior vice president and chief economist. “The HPSI hit and remained near an all-time high in 2019, driven by the 16-percentage point year-over-year increase in the share of consumers believing it is a good time to buy. The HPSI’s strength supports our prediction of a healthy housing market in 2020, as well as consumers’ appetite and ability to absorb the expected increase in entry-level inventory.”
HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS
- Good/Bad Time to Buy: The percentage of Americans who say it is a good time to buy decreased this month from 61% to 59%, while the percentage who say it is a bad time to buy increased from 29% to 32%. As a result, the net share of Americans who say it is a good time to buy decreased 5 percentage points.
- Good/Bad Time to Sell: The percentage of Americans who say it is a good time to sell decreased this month from 66% to 65%, while the percentage who say it’s a bad time to sell decreased from 26% to 22%. As a result, the net share of those who say it is a good time to sell increased 3 percentage points.
- Home Price Expectations: The percentage of Americans who say home prices will go up in the next 12 months increased this month from 44% to 50%, while the percentage who said home prices will go down stayed the same at 10%. The share who think home prices will stay the same decreased from 40% to 35%. As a result, the net share of Americans who say home prices will go up increased 6 percentage points.
- Mortgage Rate Expectations: The percentage of Americans who say mortgage rates will go down in the next 12 months decreased this month from 11% to 7%, while the percentage who expect mortgage rates to go up remained flat at 39%. The share who think mortgage rates will stay the same increased from 42% to 46%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months fell 4 percentage points.
- Job Concerns: The percentage of Americans who say they are not concerned about losing their job in the next 12 months remained flat at 86%, while the percentage who say they are concerned decreased from 14% to 12%. As a result, the net share of Americans who say they are not concerned about losing their job rose 2 percentage points.
- Household Income: The percentage of Americans who say their household income is significantly higher than it was 12 months ago remained the same at 28%, while the percentage who say their household income is significantly lower increased from 10% to 11%. The percentage who say their household income is about the same remained flat at 60%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 1 percentage point.
