Consumers Temper Optimism on Housing Despite Improved Mortgage Rate Expectations

Measure of Housing Sentiment Down Slightly After Last Month's Jump

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May 07, 2019, 08:30 ET

WASHINGTON, May 7, 2019 /PRNewswire/ -- The Fannie Mae Home Purchase Sentiment Index® (HPSI) dipped 1.5 points in April to 88.3, offsetting some of the prior month's 5.5 point jump. A decrease in the "Good Time to Buy" component helped drive the index lower, despite another supportive mortgage rate outlook from consumers. The net share of respondents expecting mortgage rates to go down over the next 12 months has risen a total of 12 percentage points over March and April.

"Households remain upbeat about economic activity but have more mixed attitudes toward the housing market," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "While home selling confidence remains strong and more consumers on net expect mortgage rates to decline over the next year, respondents walked back some of their buying optimism from March. Improving perceptions of income gains and a softening home price growth outlook should help support housing demand. However, increasing expectations among consumers that mortgage rates will continue to be favorable for some time will likely gain additional support following last week's Fed meeting – and may also be reducing their urgency to buy."

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae's 2019 Home Purchase Sentiment Index (HPSI) decreased in April by 1.5 points to 88.3. The HPSI is down 3.4 points compared with the same time last year.

The net share of Americans who say it is a good time to buy a home decreased 8 percentage points to 14%. This component is down 15 percentage points from the same time last year.
The net share of those who say it is a good time to sell a home remained unchanged at 43%. This component is down 2 percentage points from the same time last year.
The net share of those who say home prices will go up decreased 2 percentage points to 36%. This component is down 13 percentage points from the same time last year.
The net share of Americans who say mortgage rates will go down over the next 12 months increased 5 percentage points to -40%. This component is up 8 percentage points from the same time last year.
The net share of Americans who say they are not concerned about losing their job decreased 6 percentage points to 74%. This component is down 2 percentage points from the same time last year.
The net share of those who say their household income is significantly higher than it was 12 months ago increased 2 percentage points to 22%. This component is up 4 percentage points from the same time last year.

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 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 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 stabilize the housing market in the near-term, and provide support in the future. The April 2019 National Housing Survey was conducted between April 1, 2019 and April 23, 2019. 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 April 2019 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