Housing Sentiment Dips Again, Inches Closer to All-Time Low

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Oct 07, 2022, 08:30 ET

Consumers Appear Increasingly Sensitive to Affordability Constraints of Higher Mortgage Rates and Elevated Home Prices

WASHINGTON, Oct. 7, 2022 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased 1.2 points in September to 60.8, its seventh consecutive monthly decline, amid growing affordability constraints. Surveyed consumers reported expectations that mortgage rates will move higher over the next 12 months, and, for the first time since May 2020, more respondents than not expect home prices to decline. In September, only 19% of consumers indicated that it's a good time to buy a home – down from 22% the prior month – while 59% indicated that it's a good time to sell. Year over year, the full index is down 13.7 points.

"The HPSI declined this month to its lowest level since October 2011," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Consumers' expectation that home prices will decrease matched a survey high, with a higher percentage of consumers believing home prices will decrease rather than increase over the next year – a shift in survey sentiment that had previously only happened in 2011 and at the start of the pandemic in 2020. Moreover, 75% of consumers still think it's a bad time to buy a home, with most citing high home prices and unfavorable economic and mortgage rate conditions as primary reasons. As long as supply is limited and affordability pressures continue to constrain potential homebuyers via elevated home prices and mortgage rates, we expect home sales will remain sluggish."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased in September by 1.2 points to 60.8. The HPSI is down 13.7 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 decreased from 22% to 19%, while the percentage who say it is a bad time to buy increased from 73% to 75%. As a result, the net share of those who say it is a good time to buy decreased 5 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 remained unchanged at 59%, while the percentage who say it's a bad time to sell decreased from 35% to 33%. As a result, the net share of those who say it is a good time to sell increased 2 percentage points month over month.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 33% to 32%, while the percentage who say home prices will go down increased from 33% to 35%. The share who think home prices will stay the same remained unchanged at 28%. As a result, the net share of Americans who say home prices will go up decreased 3 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 11% to 9%, while the percentage who expect mortgage rates to go up increased from 61% to 64%. The share who think mortgage rates will stay the same decreased from 25% to 20%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 5 percentage points month over month.
Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 79% to 78%, while the percentage who say they are concerned remained unchanged at 21%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 1 percentage point month over month.
Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 25% to 26%, while the percentage who say their household income is significantly lower decreased from 15% to 11%. The percentage who say their household income is about the same increased from 59% to 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 5 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). 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 September 2022 National Housing Survey was conducted between September 1, 2022 and September 21, 2022. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by ReconMR on behalf of PSB Insights and in coordination with Fannie Mae.

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 & Strategic Research Group, please click here.

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, 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, 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 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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