Consumer confidence in the housing market improved in January, rising 3.7 points to a score of 89.5 on Fannie Mae’s Home Purchase Sentiment Index (HPSI).
The increase in the index score reverses the decrease that came in December.
The net share of respondents who said now is a good time to buy a home increased three percentage points compared with December.
Additionally, the net share who reported that now is a good time to sell a home increased four percentage points and is now up 23 percentage points year over year.
“[The] HPSI rebounded from last month’s dip to a new survey high in January, in large part due to the spike in consumers’ net expectations that home prices will increase over the next year,” says Doug Duncan, senior vice president and chief economist at Fannie Mae, in a release. “Results may continue to fluctuate over the coming months as consumers sort out the implications of the newly passed tax legislation on their household finances.”
The net share who said home prices will go up in the next 12 months increased eight percentage points in January.
The net share who said they are not concerned about losing their job increased five percentage points.
The net share who said mortgage rates will go down over the next 12 months increased two percentage points.
The net share reporting that their income is significantly higher than it was 12 months ago remained flat.
“Over the past year, continued home price growth has helped spur a sizable increase in the net share of consumers who say it’s a good time to sell a home but also a modest weakening in the net share who say it is a good time to buy,” Duncan says. “At the start of 2018, it is still too early to determine the overall effect of the new tax legislation on housing, and we will need to see whether positive impacts on both housing demand and supply materialize in the coming months.”