Fannie Mae’s Home Purchase Sentiment Index
(HPSI) reversed a five-month long decline in January, posting a 2-percentage
point increase. The Index, which
summarizes consumer responses to six questions from Fannie Mae’s monthly
National Housing Survey, was at 82.7 following the January gain, 1.2 percentage
points higher than in the January 2016.
Four of the six components in the survey rose
in January. The net share of Americans who believe that home prices will
go up in the next 12 months increased by 7 percentage points to a net of 42
percent. While not a component of the
HPSI, the percentage increase in home prices expected by survey respondents
rose from 2.1 percent in December to 3.2 percent.
net share of consumers reporting significantly higher household income in the past
12 months rose by 5 percentage points in January and there was an increase of 1
percentage point to 69 percent in the net responses from consumers about their confidence
in not losing their jobs. Those believing it is a good time to sell a house
rose on net by 2 points but those who see it as a good time to buy declined 3
points making for a 29 percent three-way tie for the survey low with May and
September 2016. The net share of those who believe mortgage
rates will go down remained unchanged at a negative 55%.
“Three months after the presidential
election, measures of consumer optimism regarding personal financial prospects
and the economy are at or near the highest levels we’ve seen in the nearly
seven-year history of the National Housing Survey,” said Doug Duncan, senior
vice president and chief economist at Fannie Mae. “However, any significant acceleration
in housing activity will depend on whether consumers’ favorable expectations
are realized in the form of income gains sufficient to offset constrained
housing affordability. If consumers’ anticipation of further increases in home
prices and mortgage rates materialize over the next 12 months, then we may see
housing affordability tighten even more.”
Among notable changes to
non-component survey questions, those who said they would buy a home the next
time they moved declined from 68 percent of respondents in December to 65
percent while those who thought they would have difficulty getting a mortgage
rose 5 percentage points to 46 percent.
There were significant changes in consumers answers about their
expectations for their own personal financial situation over the next 12 months
as shown in the graphic below.
The Home Purchase Sentiment Index
(HPSI) distills information about consumers’ home purchase sentiment from the
NHS into a single number that reflects current views and forward-looking
expectations of housing market conditions.
The NHS is conducted monthly by telephone among 1,000 consumers, both
homeowners and renters. Respondents are
asked more than 100 questions used to track attitudinal shifts, six of which
are used to construct the HPSI. The January
2016 National Housing Survey was conducted between January 1 and January 21,