Falling mortgage interest rates, moderating home price growth and a strong labor market combined to boost consumer sentiment toward the housing market in August.
As a result, Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased 0.1% compared with July to a score of 93.8 – a new survey high.
Although the net share of respondents who said it was a good time to buy a home decreased one percentage point compared with the previous month, this survey component was up four percentage points compared with August 2018.
And although the share who said it was a good time to sell a home decreased four percentage points compared with July, this component was up two percentage points compared with a year earlier.
Increases in consumer confidence with regard to mortgage rates, home prices and income are what drove the 0.1% increase in the overall survey score for August.
The share of respondents who said home prices would go up over the next 12 months fell one percentage point compared with the previous month and was down two percentage points compared with a year earlier.
The share who said mortgage rates would go down over the next 12 months increased 11 percentage points compared with July and was up 35 percentage points compared with August 2018.
The share who said they were not concerned about losing their job over the next 12 months decreased four percentage points. This component was down three percentage points compared with the same time last year.
The share who said their household income was significantly higher than it was 12 months earlier remained unchanged.
“Growing expectations that mortgage rates will remain flat or decline are reflected in the HPSI’s latest reading, which is now at a survey high even though other indicators of economic and housing market sentiment are flat to negative,” says Doug Duncan, senior vice president and chief economist for Fannie Mae, in a statement. “Unfortunately, much of the lower interest rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy. We do expect housing market activity to remain relatively stable, and the favorable rate environment should continue supporting increased refinance activity.”