Consumer Sentiment Toward Housing Market Dipped in February

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Consumer sentiment toward the housing market fell in February, dipping 0.4 points to a score of 84.3 on Fannie Mae’s Home Purchase Sentiment Index (HPSI).

Interestingly, consumer confidence toward income (i.e. wage growth) was the largest variable, month over month.

In January, the share of consumers who said their household income was significantly higher than it was 12 months earlier increased eight percentage points. However, in February, the share of consumers who said their household income was significantly higher decreased nine percentage points – more than offsetting January’s increase in this category.

The net share of Americans who said it is a good time to buy a home remained unchanged. However, this component is down seven percentage points compared with the same time last year.

The net share who said it is a good time to sell a home decreased five percentage points. However, this component is down six percentage points from the same time last year.

The net share who said home prices will go up increased three percentage points to 33%. This component is down 12 percentage points compared with February year.

The net result: The index was basically flat compared with January.

“The HPSI held steady in February, as consumers’ continuing optimism about economic conditions seems to be balanced with softening attitudes toward the housing market,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Job confidence reached a new survey high, but consumers were less optimistic about home buying and selling conditions than they were a year ago.

“Notably, home price growth expectations have trended significantly downward, with the net share of consumers expecting home prices to rise falling 19 percentage points from its survey high established at the start of 2018,” Duncan said. “While declining home price expectations may point to improving affordability, the share of consumers who think it’s a bad time to buy has grown over the last year, and high home prices remain the most frequently cited concern. It is plausible that consumers believe that price gains could decelerate further, making it worthwhile to wait rather than act now.”

The net share of Americans who said mortgage rates will go down over the next 12 months increased one percentage point to -52%. This component is up five percentage points from the same time last year.

The net share of Americans who said they are not concerned about losing their job increased eight percentage points to 81%. This component is up 10 percentage points from the same time last year.

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