Consumer Sentiment on Housing Dips Slightly Despite Growing Labor Market Optimism

Eighty-Two Percent of Consumers Report Not Being Concerned About Losing Their Job in Next 12 Months

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Mar 08, 2021, 08:30 ET

WASHINGTON, March 8, 2021 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased in February by 1.2 points to 76.5. Four of the HPSI's six components fell month over month, including most notably the homebuying conditions and household income components. Offsetting much of that decline, however, was increased optimism regarding job security, with consumers reporting a significantly more positive view of the labor market compared to January. Year over year, the HPSI is down 16.0 points.

"As we expected, the HPSI remained relatively flat in February, but underlying data indicate growing job-related optimism among consumers, especially among lower-income and renter groups," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "With the growing likelihood that lockdown restrictions will continue easing as vaccination efforts ramp up, and with warmer weather on the horizon and another round of fiscal stimulus pending, these two segments of consumers may have good reason to feel more positive about the labor market. This optimism appears to be well-placed, too, given Friday's jobs report from the Bureau of Labor Statistics, which showed the strongest net gain in payroll employment since October, although the unemployment rate remains quite high by historical standards. However, other components of the index remain well below pre-pandemic levels, so we believe there may still be room for improvement in housing and economic attitudes in the coming months, depending in part on the future path of mortgage rates."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased in February by 1.2 points to 76.5. The HPSI is down 16.0 points compared to the same time last year. Read the full research report for additional information.

Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 52% to 48%, while the percentage who say it is a bad time to buy increased from 37% to 43%. As a result, the net share of those who say it is a good time to buy decreased 10 percentage points month over month.
Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 57% to 55%, while the percentage who say it's a bad time to sell increased from 33% to 35%. As a result, the net share of those who say it is a good time to sell decreased 4 percentage points month over month.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 41% to 47%, while the percentage who say home prices will go down increased from 17% to 18%. The share who think home prices will stay the same decreased from 34% to 29%. As a result, the net share of Americans who say home prices will go up increased 5 percentage points month over month.
Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 9% to 8%, while the percentage who expect mortgage rates to go up increased from 45% to 47%. The share who think mortgage rates will stay the same increased from 37% to 38%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 3 percentage points month over month.
Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 75% to 82%, while the percentage who say they are concerned decreased from 24% to 17%. As a result, the net share of Americans who say they are not concerned about losing their job increased 14 percentage points month over month.
Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 21% to 17%, while the percentage who say their household income is significantly lower increased from 14% to 19%. The percentage who say their household income is about the same decreased from 64% to 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 9 percentage points month over month.

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 approximately 1,000 respondents 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 70 percent of respondents via their cell phones (as of January 2018). 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 support the housing market. The February 2021 National Housing Survey was conducted between February 1, 2021 and February 23, 2021. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by PSB, in coordination with Fannie Mae.

Detailed HPSI & NHS Findings
For detailed findings from the February 2021 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.

About Fannie Mae
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of people in America. 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 | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

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Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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