Despite increasing mortgage rates and a tepid housing market, positive consumer perception of the economy carried over to home buying during November, according to Fannie Mae.
The Fannie Mae Home Purchase Sentiment Index went up to 86.2 in November after hitting the lowest point of 2018 in October. However, the increase was not enough to give the index a year-over-year rise as it was down from 87.8 in November 2017.
“The HPSI has moved within a tight range over the past five months, as positive sentiment regarding the overall economy continued to offset cooling housing sentiment,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release.
The net percentage of consumers who believe their income is significantly higher in the last 12 months went up to 24% from 14% year-over-year and rose from 19% in October. Home price expectations had an even greater drop, as only 33% of consumers believe prices will rise in the next year, down from 46% a year ago and 37% last month.
But more consumers expect mortgage rates to increase in the next 12 months, as the percentage share went to 56% from 51% a year ago.
“Consumers’ perceptions of growth in their household income reached a survey high this month, helping to absorb some of the impact of increasing mortgage rates on housing market activity. Meanwhile, the net share of consumers expecting home prices to increase over the next 12 months continues to moderate, dropping by 13 percentage points since this time last year,” Duncan said.