The Fannie Mae Home Purchase Sentiment Index (HPSI) increased 1 point to 75.5 in October, as consumers once again reported mixed feelings about home-buying and home-selling conditions, as well as increased pessimism regarding the larger economy.
Overall, four of the index’s six components increased month over month. In October, slightly greater shares of consumers reported that it’s a good time to buy a home and sell a home – with those numbers now sitting at 30% and 77%, respectively, up from 28% and 74% last month. Consumers also reported even stronger expectations that mortgage rates will increase over the next 12 months. Year over year, the full index is down 6.2 points.
“The HPSI remained relatively flat this month, staying within the general bounds it began to set in June 2020 – following the initial shock of the pandemic to the index,” says Doug Duncan, Fannie Mae’s senior vice president and chief economist. “While homebuying and home-selling sentiment remain at historically low and high levels, respectively, more consumers now expect that their personal financial situation will not improve over the next 12 months. This is particularly true among surveyed homeowners and older age groups.”
“In October, consumers also reported greater concern about the direction of the economy, with ‘right track’ sentiment reaching its lowest level since October 2013,” continues Duncan. “We believe the uptick in negative economic sentiment is likely a function of ongoing supply chain disruptions and inflation concerns. However, while economic uncertainty could potentially dampen mortgage demand over the longer term, we believe current market conditions remain conducive to home purchase activity, as demand for homes continues to far outstrip the supply available for sale.”
Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased in October by 1 point to 75.5. The HPSI is down 6.2 points compared to the same time last year.
The percentage of respondents who say it is a good time to buy a home increased from 28% to 30%, while the percentage who say it is a bad time to buy decreased from 66% to 65%. As a result, the net share of those who say it is a good time to buy increased 3 percentage points month over month.
The percentage of respondents who say it is a good time to sell a home increased from 74% to 77%, while the percentage who say it’s a bad time to sell decreased from 19% to 17%. As a result, the net share of those who say it is a good time to sell increased 5 percentage points month over month.
The percentage of respondents who say home prices will go up in the next 12 months increased from 37% to 39%, while the percentage who say home prices will go down decreased from 24% to 22%. The share who think home prices will stay the same decreased from 33% to 32%. As a result, the net share of Americans who say home prices will go up increased 4 percentage points month over month.
The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 8% to 5%, while the percentage who expect mortgage rates to go up increased from 51% to 55%. The share who think mortgage rates will stay the same remained unchanged at 33%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 7 percentage points month over month.
The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 81% to 84%, while the percentage who say they are concerned decreased from 16% to 15%. As a result, the net share of Americans who say they are not concerned about losing their job increased 4 percentage points month over month.
The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 27% to 23%, while the percentage who say their household income is significantly lower decreased from 13% to 12%. The percentage who say their household income is about the same increased from 57% to 62%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 3 percentage points month over month.
