Housing Sentiment Edges Upward as Reported Conditions Favor Sellers

Lower-Income and Renter Groups Express Greater Optimism Across Nearly All HPSI Components

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Feb 08, 2021, 08:30 ET

WASHINGTON, Feb. 8, 2021 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) increased in January to 77.7, a 3.7 point improvement from December. Consumers reported a significantly more positive view of home-selling conditions month over month, with that particular component jumping 16 percentage points on net. The other five components remained relatively flat. Year over year, the HPSI is down 15.3 points.

"The HPSI experienced a modest uptick in January, reversing much of December's decline," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Interestingly, lower-income and renter groups were more optimistic this past month across nearly all of the sentiment index's components. We will pay close attention to see if this newfound optimism develops into a trend, which could indicate either that some demographics who have been more negatively impacted by the pandemic may be starting to feel the economic recovery or that this is a response to the additional stimulus enacted in December."

"Overall, the index's monthly increase was driven largely by a substantial jump in the share of consumers reporting that it's a good time to sell a home, with many citing favorable mortgage rates, high home prices, and low housing inventory as their primary rationale. Among owners and higher income groups, however, the other five components of the index remained relatively flat or slightly negative, suggesting to us that some consumers are waiting to gauge the effectiveness of any new fiscal policies and vaccination distribution programs on both housing and the larger economy."

Home Purchase Sentiment Index – Component Highlights
Fannie Mae's Home Purchase Sentiment Index (HPSI) increased in January by 3.7 points to 77.7. The HPSI is down 15.3 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 remained unchanged at 52%, while the percentage who say it is a bad time to buy decreased from 39% to 37%. As a result, the net share of Americans who say it is a good time to buy increased 2 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 increased from 50% to 57%, while the percentage who say it's a bad time to sell decreased from 42% to 33%. As a result, the net share of those who say it is a good time to sell increased 16 percentage points month over month.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained the same at 41%, while the percentage who say home prices will go down increased from 16% to 17%. The share who think home prices will stay the same remained unchanged at 34%. As a result, the net share of Americans who say home prices will go up decreased 1 percentage point month over month.
Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 8% to 9%, while the percentage who expect mortgage rates to go up increased from 43% to 45%. The share who think mortgage rates will stay the same decreased from 39% to 37%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 1 percentage point month over month.
Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months remained unchanged at 75%, while the percentage who say they are concerned decreased from 25% to 24%. As a result, the net share of Americans who say they are not concerned about losing their job increased 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 20% to 21%, while the percentage who say their household income is significantly lower decreased from 18% to 14%. The percentage who say their household income is about the same increased from 61% to 64%. 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). 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 January 2021 National Housing Survey was conducted between January 2, 2021 and January 20, 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 January 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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