HPSI Dips as Consumers' Pessimism Toward Homebuying Conditions Sets Survey Record

Gap Between Homebuying and Home-Selling Sentiment Continues to Widen

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May 07, 2021, 08:30 ET

WASHINGTON, May 7, 2021 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased in April by 2.7 points to 79.0. Four of the HPSI's six components decreased month over month, most notably the component related to home-buying conditions, which turned net negative for the first time in the survey's history. This decline was offset in part by consumers' ongoing optimism toward home-selling conditions, which continued its significant rise from this time last year and has nearly returned to its pre-pandemic peak. Year over year, the HPSI is up 16.0 points.

"April's HPSI reading appears to have been acutely impacted by the ongoing lack of housing supply despite improving economic conditions," said Doug Duncan, Senior Vice President and Chief Economist. "Consumer sentiment toward buying homes reached the lowest level in our survey's ten-year history; unsurprisingly, respondents overwhelmingly cited the lack of supply and high home prices as primary reasons for their pessimism. The decrease in homebuying sentiment likely indicates that some consumers, potentially flush with savings – perhaps boosted in part by stimulus payments – may be attempting, but failing, to buy a home due to heightened competition for relatively few listed homes. Notably, consumers in the household income range of $50,000 to $100,000, a range inclusive of the Census Bureau's reported median household income level, showed a particularly large decrease in overall housing sentiment, and we know that the housing market serving the affordable segment has been particularly competitive."

Duncan continued, "Conversely, consumer positivity regarding home-selling conditions nearly matched its all-time high, demonstrating a large divergence in perceived conditions between sellers and buyers, as measured by the gap between the two components. As has become standard discourse in the housing industry recently, increasing the supply of homes for sale would certainly help bring balance to this strong seller's market, but unfortunately the most recent data doesn't suggest that inventory is likely to improve in the near future."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased in April by 2.7 points to 79.0. The HPSI is up 16.0 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 53% to 47%, while the percentage who say it is a bad time to buy increased from 40% to 48%. As a result, the net share of those who say it is a good time to buy decreased 14 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 61% to 67%, while the percentage who say it's a bad time to sell decreased from 28% to 26%. As a result, the net share of those who say it is a good time to sell increased 8 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 50% to 49%, while the percentage who say home prices will go down increased from 14% to 17%. The share who think home prices will stay the same decreased from 29% to 27%. As a result, the net share of Americans who say home prices will go up decreased 4 percentage points month over month.
Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 7%, while the percentage who expect mortgage rates to go up remained unchanged at 54%. The share who think mortgage rates will stay the same decreased from 34% to 33%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 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 decreased from 82% to 80%, while the percentage who say they are concerned decreased from 17 to 16%. 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 decreased from 25% to 21%, while the percentage who say their household income is significantly lower increased from 15% to 17%. The percentage who say their household income is about the same increased from 56% to 57%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 6 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 April 2021 National Housing Survey was conducted between April 1, 2021 and April 27, 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 April 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:
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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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