Consumer Sentiment: Bullish on Home-Buying

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Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased 1.3 points in January, to reach 93.0: the third consecutive month that saw an increase, and notching closer to the survey high of 93.8 set last year.

Four of the six HPSI components increased month over month, including the percentage of Americans who believe that mortgage rates will go down or stay the same over the next 12 months, which now sits at 55%.

Year over year, the HPSI is up 8.3 points, reflecting consumers’ increasingly positive view that it’s a good time to both buy and sell a home.

“The HPSI posted another strong reading to open the new year, helped in large part by the upward trend in the share of consumers saying they expect mortgage rates to remain steady,” said Doug Duncan, Senior Vice President and Chief Economist. “

“Low rates continue to be a key driver of consumer optimism about both current home-buying and home-selling conditions,” explains Doug Duncan, Fannie Mae’s senior vice president and chief economist. “Favorable views on job security and personal financial expectations reflect the strength of the labor market, which we believe will continue to bolster housing demand.”

Some report highlights:

Good/Bad Time to Buy: The percentage of Americans who say it is a good time to buy remained the same this month at 59%, while the percentage who say it is a bad time to buy decreased from 32% to 30%. As a result, the net share of Americans who say it is a good time to buy increased 2 percentage points.

Good/Bad Time to Sell: The percentage of Americans who say it is a good time to sell increased this month from 65% to 66%, while the percentage who say it’s a bad time to sell decreased from 22% to 21%. As a result, the net share of those who say it is a good time to sell increased 2 percentage points.

Home Price Expectations: The percentage of Americans who say home prices will go up in the next 12 months decreased this month from 50% to 48%, while the percentage who said home prices will go down decreased from 10% to 7%. The share who think home prices will stay the same increased from 35% to 38%. As a result, the net share of Americans who say home prices will go up increased 1 percentage point.

Mortgage Rate Expectations: The percentage of Americans who say mortgage rates will go down in the next 12 months remained the same this month at 7%, while the percentage who expect mortgage rates to go up decreased from 39% to 33%. The share who think mortgage rates will stay the same increased from 46% to 48%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 6 percentage points.

Job Concerns: The percentage of Americans who say they are not concerned about losing their job in the next 12 months remained flat at 86%, while the percentage who say they are concerned increased from 12% to 14%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 2 percentage points.

Household Income: The percentage of Americans who say their household income is significantly higher than it was 12 months ago decreased from 28% to 27%, while the percentage who say their household income is significantly lower remained the same at 11%. The percentage who say their household income is about the same remained increased from 60% to 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 1 percentage point.

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