HPSI Increases as Housing Confidence Continues Upward Trend

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May 08, 2023, 08:30 ET

Survey Finds Greater Consumer Optimism About Mortgage Rates

WASHINGTON, May 8, 2023 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) increased in April to its highest level since May 2022, jumping 5.5 points to 66.8. All six of the HPSI's components increased month over month, most notably the component associated with consumers' expectations of mortgage rates. While the component remains negative on net – meaning more respondents than not expect mortgage rates to go up over the next year – in April, 22% of consumers indicated that they expect mortgage rates to go down, compared to only 12% last month. Of course, affordability constraints continue to hinder overall homebuying sentiment, with only 23% of respondents indicating it's a good time to buy a home, although a plurality once again believe that home prices will increase over the next 12 months. Year over year, the full index is down 1.7 points.

"This month's increase in the HPSI was the largest in over two years, primarily driven by consumers' more optimistic mortgage rate expectations," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "An increased number of respondents indicated they think mortgage rates will go down over the next year, a belief that could be due to a combination of factors, including an awareness of decelerating inflation, market suggestions that monetary conditions will ease in the not-too-distant future, and, of course, actual mortgage rate declines during the month."

Duncan continued: "However, the bump in optimism may prove to be temporary, as consumers continue to report uncertainty about the direction of home prices – and we know that high home prices remain the primary reason given by consumers who think it's a bad time to buy a home. Until affordability improves for a larger swath of the homebuying public, we believe home sales will remain subdued compared to previous years."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased in April by 5.5 points to 66.8. The HPSI is down 1.7 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 increased from 20% to 23%, while the percentage who say it is a bad time to buy decreased from 79% to 77%. As a result, the net share of those who say it is a good time to buy increased 6 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 58% to 62%, while the percentage who say it's a bad time to sell decreased from 40% to 38%. As a result, the net share of those who say it is a good time to sell increased 5 percentage points month over month.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 32% to 37%, while the percentage who say home prices will go down increased from 31% to 32%. The share who think home prices will stay the same decreased from 35% to 31%. As a result, the net share of those who say home prices will go up increased 5 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 12% to 22%, while the percentage who expect mortgage rates to go up decreased from 51% to 47%. The share who think mortgage rates will stay the same decreased from 34% to 31%. As a result, the net share of those who say mortgage rates will go down over the next 12 months increased 13 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 increased from 78% to 79%, while the percentage who say they are concerned remained unchanged at 21%. As a result, the net share of those 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 24%, while the percentage who say their household income is significantly lower remained unchanged at 11%. The percentage who say their household income is about the same decreased from 68% 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 4 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 National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed attitudinal longitudinal surveys of its kind, 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 2023 National Housing Survey was conducted between April 1, 2023 and April 19, 2023. Most of the data collection occurred during the first two weeks of this period. The April 2023 NHS was conducted exclusively through AmeriSpeak^®, NORC at the University of Chicago's probability-based panel, on behalf of PSB Insights and in coordination with Fannie Mae. Calculations are made using unrounded and weighted respondent level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.

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 the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was recently awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.

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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https://www.fanniemae.com/news

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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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