Analysis Reveals Less Bullish Consumer Sentiment on Home Purchases

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Fannie Mae says its Home Purchase Sentiment Index (HPSI) fell 1.7 points in November to 80.0, representing the first decline after three consecutive months of increases.

Three of the six HPSI components decreased month over month, with consumers reporting a more pessimistic view of home-buying conditions, including mortgage rate expectations, but a more optimistic view of home-selling conditions and home prices.

Moreover, consumers also reported mixed results regarding job loss concerns and household income changes. Year over year, the HPSI is down 11.5 points.

“The HPSI appears to have peaked for now as consumers continue to consider how COVID-19 impacts their ability to buy or sell a home,” says Doug Duncan, senior vice president and chief economist. “This follows the HPSI’s recovery of slightly more than half of the loss experienced during the first few months of the pandemic.

“Drilling down a bit, home purchase confidence has recovered more for homeowners than for renters, in part because homeowners have been less likely than renters to have had their jobs and finances impacted by the pandemic,” Duncan adds. “Interestingly, the gap between the HPSI broken out by the homeowner and renter subgroups hit a survey high in August but, despite narrowing slightly, remains elevated and well above the survey average.”

The percentage of respondents who say it is a good time to buy a home decreased from 60% to 57%, while the percentage who say it is a bad time to buy remained the same at 35%. Meanwhile, the percentage of respondents who say it is a good time to sell a home remained the same at 59%, while the percentage who say it’s a bad time to sell decreased from 35% to 33%.

The percentage of respondents who say home prices will go up in the next 12 months increased from 40% to 41%, while the percentage who say home prices will go down decreased from 20% to 13%. The share who think home prices will stay the same increased from 31% to 35%.

Additionally, the percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 11% to 8%, while the percentage who expect mortgage rates to go up increased from 32% to 43%. The share who think mortgage rates will stay the same decreased from 49% to 40%.

Read the full research report for additional information.

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