Fannie Mae: Consumers More Optimistic About Both Home Buying and Selling

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Fannie Mae says its Home Purchase Sentiment Index (HPSI) increased 0.7 points in October to 81.7: the third consecutive month where sentiment has increased.

Three of the six HPSI components increased month over month, with consumers reporting a more optimistic view of both home-buying and home-selling conditions, in addition to expecting mortgage rate declines. However, consumers also reported greater pessimism regarding their personal finances and employment outlook.

Year over year, the HPSI is down 7.1 points.

“In October, home purchase sentiment and personal finance sentiment diverged to produce only a slight increase in the HPSI,” says Doug Duncan, senior vice president and chief economist. “Though there were improvements in the HPSI’s buying, selling and mortgage interest rate outlook components, we saw similar declines in the job security and household income change components.

“To date, the HPSI has recovered over 60 percent of its COVID-19 pandemic loss, reflecting the bright spot that the mortgage market has been in the economy,” he adds. “However, the continuing evolution of the pandemic and the 2020 election outcomes may have longer lasting and unexpected impacts on consumer sentiment, as we saw following the 2016 elections, and we expect both factors will shape the housing market over the coming months.”

Some study highlights:

Good/bad time to buy: The percentage of respondents who say it is a good time to buy a home increased from 54% to 60%, while the percentage who say it is a bad time to buy decreased from 38% to 35%. As a result, the net share of Americans who say it is a good time to buy increased 9 percentage points month over month.

Good/bad time to sell: The percentage of respondents who say it is a good time to sell a home increased from 56% to 59%, while the percentage who say it’s a bad time to sell decreased from 38% to 35%. As a result, the net share of those who say it is a good time to sell increased 6 percentage points month over month.

Home price expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased this month from 41% to 40%, while the percentage who say home prices will go down increased from 17% to 20%. The share who think home prices will stay the same decreased from 34% to 31%.

Mortgage rate expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months remained unchanged at 11%, while the percentage who expect mortgage rates to go up decreased from 38% to 32%. The share who think mortgage rates will stay the same increased from 44% to 49%.

Job concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 83% to 79%, while the percentage who say they are concerned increased from 16% to 21%.

Household income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 24% to 23%, while the percentage who say their household income is significantly lower increased from 17% to 20%. The percentage who say their household income is about the same decreased from 59% to 55%.

More details can be found here.

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