Housing Sentiment Nears Survey High as More Consumers Expect Mortgage Rates to Remain Favorable

Majority of Americans Continue to Report It's a Good Time to Both Buy and Sell a Home

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Feb 07, 2020, 07:30 ET

WASHINGTON, Feb. 7, 2020 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) rose for the third consecutive month, increasing 1.3 points in January to 93.0 and moving closer to the survey high of 93.8 set last year. Four of the six HPSI components increased month over month, including the percentage of Americans who believe that mortgage rates will go down or stay the same over the next 12 months, which now sits at 55 percent. Year over year, the HPSI is up 8.3 points, reflecting in part consumers' increasingly positive view that it's a good time to both buy and sell a home.

"The HPSI posted another strong reading to open the new year, helped in large part by the upward trend in the share of consumers saying they expect mortgage rates to remain steady," said Doug Duncan, Senior Vice President and Chief Economist. "Low rates continue to be a key driver of consumer optimism about both current homebuying and home-selling conditions. Favorable views on job security and personal financial expectations reflect the strength of the labor market, which we believe will continue to bolster housing demand. With much-needed inventory set to come online this year, offering a modicum of relief to the shortage of entry-level supply, this month's HPSI reading remains consistent with our latest macroeconomic forecast and our theme for 2020: A Resilient Economy Overcomes Risks to Drive Housing."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased in January by 1.3 points to 93.0. The HPSI is up 8.3 points compared to the same time last year. Read the full research report for additional information.

Good/Bad Time to Buy: The percentage of Americans who say it is a good time to buy remained the same this month at 59%, while the percentage who say it is a bad time to buy decreased from 32% to 30%. As a result, the net share of Americans who say it is a good time to buy increased 2 percentage points.
Good/Bad Time to Sell: The percentage of Americans who say it is a good time to sell increased this month from 65% to 66%, while the percentage who say it's a bad time to sell decreased from 22% to 21%. As a result, the net share of those who say it is a good time to sell increased 2 percentage points.
Home Price Expectations: The percentage of Americans who say home prices will go up in the next 12 months decreased this month from 50% to 48%, while the percentage who said home prices will go down decreased from 10% to 7%. The share who think home prices will stay the same increased from 35% to 38%. As a result, the net share of Americans who say home prices will go up increased 1 percentage point.
Mortgage Rate Expectations: The percentage of Americans who say mortgage rates will go down in the next 12 months remained the same this month at 7%, while the percentage who expect mortgage rates to go up decreased from 39% to 33%. The share who think mortgage rates will stay the same increased from 46% to 48%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 6 percentage points.
Job Concerns: The percentage of Americans who say they are not concerned about losing their job in the next 12 months remained flat at 86%, while the percentage who say they are concerned increased from 12% to 14%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 2 percentage points.
Household Income: The percentage of Americans who say their household income is significantly higher than it was 12 months ago decreased from 28% to 27%, while the percentage who say their household income is significantly lower remained the same at 11%. The percentage who say their household income is about the same remained increased from 60% 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 1 percentage point.

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 January 2020 National Housing Survey was conducted between January 2, 2020 and January 23, 2020. 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 2020 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 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:
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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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