Housing Sentiment Continues to Sour as Economy Booms

Despite the success of the U.S. economy as of late,
housing sentiment seems to have hit a rough patch
.  Fannie Mae said its Home Purchase Sentiment
Index (HPSI) continued to decline in October, moving lower for the third time
in four months.  The index, based on
responses to a portion of questions in the National Housing Survey, fell by 2.0
points to 85.7 with five of the six components posting declines and the fifth unchanged
from September.



The net share of Americans who say it is a
good time to buy a house fell 5 percentage points to only 21 percent. The net
is the result of subtracting negative responses from positive ones.  Those saying it is a good time to sell was
down by 3 points to 35 percent.  That
measure has dropped by 9 points since June.

The net share of those who expect prices
to continue to rise fell 2 percentage points
to 37 percent while the net of
those expecting mortgage rates to move lower dropped 1 point to a negative 57

The fifth component to retreat was the
question on job security. The net of those who are confident about not losing
their job over the next 12 months fell 1 point but remains at a solid 78

component that was unchanged was the net
share of those who say their household income is significantly higher than it
was 12 months ago.  It held steady at 10

“After hitting a survey high during
the spring home buying season, the HPSI has trended downward, declining in
October to its lowest level in a year,” according to Doug Duncan, Fannie Mae
senior vice president and chief economist.  “While the October drop was broad-based – all
but one of the six HPSI components declined – the net share of consumers who
said it’s a good time to buy a home posted the largest decrease, tying its
second lowest reading in the survey’s history.  The further erosion of buying sentiment
occurred despite generally positive views of the economy. Among those who said
it’s a good time to buy, 30 percent – a record high – cited favorable economic
conditions as the reason.

“Meanwhile, the share of consumers
who think the economy is on the right track continued to grow, reaching a new
survey high. The contrast between the survey’s findings of weak home buying
sentiment and overall economic optimism mirrors what we’re seeing in the
broader economy. While economic growth posted the fastest back-to-back pace in
four years in the third quarter, residential investment declined for the third
consecutive quarter
, a first for the current expansion.”

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.

The NHS, from which the HPSI is
constructed, is conducted monthly by telephone among 1,000 consumers, both
homeowners and renters.  Respondents are
asked more than 100 questions to track attitudinal shifts.  The October 2018 National Housing Survey was
conducted between October 1 and October 25, 2018.

Article source: http://www.mortgagenewsdaily.com/11072018_national_housing_survey.asp

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