Consumers Feeling Better About Housing Market Despite High Home Prices

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Nov 07, 2024, 08:30 ET

HPSI Up Significantly from All-Time Low Recorded Two Years Ago

WASHINGTON, Nov. 7, 2024 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) increased 0.7 points in October to 74.6, pushing the measure of consumer confidence to its highest level since February 2022 and significantly higher than the all-time low recorded two years ago. In October, the share of consumers who think it's a good time to buy a home increased to 20%, while the share who think it's a good time to sell a home declined to 64%. On net, consumers continue to expect home prices to rise and mortgage rates to fall, with the latter component hitting another survey high this month. The personal finance components also remained fairly flat month over month, with fewer consumers expressing job loss concerns and slightly more indicating that their household income fell year over year. The full index is up 9.7 points year over year.

"While we have seen significant improvement in overall housing sentiment over the past two years, consumers' perception of homebuying conditions remains strained, with only 20% believing it a 'good time' to buy a home, primarily due to high home prices," said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. "In fact, the share citing mortgage rates as the primary driver of their homebuying pessimism declined again this month; however, since the fielding of the survey primarily in the first half of October, mortgage rates moved sharply higher, which may serve to suppress some of the recently observed rate optimism. One effect of the prolonged period of relatively high home prices of the past four years is that we are seeing a slowly growing preference to rent rather than buy on consumers' next move. With rent growth expected to remain modest in 2025, more consumers may be seeking – and finding – attractive deals in the rental market as they continue saving toward a future home purchase."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased 0.7 points in October to 74.6. The HPSI is up 9.7 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 increased 1 percentage point this month to 20%, while the percentage who say it is a bad time to buy decreased from 81% to 80%. As a result, the net share of those who say it is a good time to buy increased 2 percentage points month over month to -60%.
Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home (64%) decreased 1 percentage point this month, while the percentage who say it's a bad time to sell (35%) remained unchanged month over month. As a result, the net share of those who say it is a good time to sell fell 1 percentage point month over month to 29%.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged at 39%, and the percentage who say home prices will go down also stayed steady at 23%. The share who think home prices will stay the same increased 1 percentage point to 38%. As a result, the net share of those who say home prices will go up in the next 12 months increased 1 percentage point month over month to 17%.
Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 42% to 39%. The percentage who expect mortgage rates to go up also decreased from 27% to 22%, a new survey low. The share who think mortgage rates will stay the same increased from 31% to 38%. As a result, the net share of those who say mortgage rates will go down over the next 12 months increased 1 percentage point month over month to 16%, a third consecutive survey high and the highest in survey history.
Job Loss Concern: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months increased from 77% to 79%, while the percentage who say they are concerned decreased 2 percentage points to 20%. As a result, the net share of those who say they are not concerned about losing their job increased 2 percentage points month over month to 58%.
Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago remained unchanged, on a rounded basis, at 18%, while the percentage who say their household income is significantly lower also remained unchanged, on a rounded basis, at 11%. The percentage who say their household income is about the same remained unchanged at 70%. The net share of those who say their household income is significantly higher than it was 12 months ago decreased 2 percentage points month over month to 6%.

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 or lower than they were a year earlier.

About Fannie Mae's National Housing Survey
The National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed longitudinal surveys of its kind 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). 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 October 2024 National Housing Survey was conducted between October 1, 2024 and October 18, 2024. Most of the data collection occurred during the first two weeks of this period. The latest NHS was conducted exclusively through AmeriSpeak^®, NORC at the University of Chicago's probability-based panel, in coordination with Fannie Mae and PSB Insights. Calculations are made using unrounded and weighted respondent-level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.

Detailed HPSI & NHS Findings
For detailed findings from the 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 and Strategic Research Group, please click here.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Mark Palim, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:
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Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group or survey respondents 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, beliefs, 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, beliefs, and other views published by the ESR Group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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