Housing Confidence Dips Amid Robust Home Price Gains and Rising Rate Expectation

News provided by

Apr 07, 2017, 08:30 ET

WASHINGTON, April 7, 2017 /PRNewswire/ -- The Fannie Mae Home Purchase Sentiment Index^® (HPSI) decreased 3.8 percentage points in March to 84.5, following February's survey high. Five of the six components that comprise the HPSI were down. The net share of Americans who reported that now is a good time to buy fell 10 percentage points, while the net share reporting that now is a good time to sell increased 9 percentage points. Consumers also expressed reduced confidence about the stability of their jobs, with the net share of that component falling 8 percentage points. Additionally, on net, the share of respondents reporting that household income is significantly higher than it was 12 months ago decreased 8 percentage points. The net share of Americans who say that mortgage rates will go down over the next twelve months fell 5 percentage points to a new survey low. Finally, the net share of those who think home prices will go up decreased by 1 percentage point this month.

"Home purchase sentiment gave back some of the gains accumulated over the prior two months that sent the index to its survey high in February. Strong home price appreciation has turned into a double-edged sword for the housing market as it boosted the net share of consumers saying it's a good time to sell to a record high, surpassing the plunging good time to buy indicator for the first time in the history of the survey," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "In addition, the net share of consumers who expect mortgage rates to rise over the next year exceeded that experienced during the 2013 taper tantrum. However, the housing market could get some tailwinds from a seasonal rise in for-sale inventory, particularly as some sellers seek to lock in profits from recent rapid home price gains. The market could also get a boost from homebuyers who decide to jump into the market before rates rise further."

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae's 2017 Home Purchase Sentiment Index (HPSI) decreased in March by 3.8 percentage points to 84.5. The HPSI is up 4.3 percentage points compared with the same time last year.

The net share of Americans who say it is a good time to buy a house fell 10 percentage points to 30%, losing much of the increased optimism seen in February.
The net percentage of those who say it is a good time to sell increased by 9 percentage points to 31%, reaching a new survey high for the second consecutive month.
High home prices were the most important reason for both the bad time to buy and good time to sell indicators, cited by 39% of consumers who say it is a bad time to buy (a survey high) and 24% of those who say it is a good time to sell.
The net share of Americans who say that home prices will go up decreased by 1 percentage point in March to 44%.
The net share of those who say mortgage rates will go down over the next twelve months fell 5 percentage points to a survey low of -60%.
The net share of Americans who say they are not concerned about losing their job fell 8 percentage points to 70%, as consumers express more measured expectations than in February.
The net share of Americans who say their household income is significantly higher than it was 12 months ago fell 8 percentage points to 11% in March, declining from last month's survey high.

ABOUT FANNIE MAE'S HOME PURCHASE SENTIMENT INDEX

The Home Purchase Sentiment Index (HPSI) distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey® (NHS) into a single number. The HPSI reflects consumers' current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers' evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

ABOUT FANNIE MAE'S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae's National Housing Survey (NHS) polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 60 percent of respondents via their cell phones (as of October 2014). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The March 2017 National Housing Survey was conducted between March 1, 2017 and March 26, 2017. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the March 2017 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.

SOURCE Fannie Mae