The Fannie Mae Home Purchase Sentiment Index (HPSI) increased by 0.1 points to 66.9 in August, remaining effectively unchanged, as consumer confidence toward housing continued along the low-level plateau set earlier this year.
Three of the HPSI’s six components increased month over month, most notably the component measuring perceived home-selling conditions. In August, 66% of consumers reported that it’s a good time to sell a home, compared to only 18% who said it was a good time to buy a home. Additionally, despite the significant rise in rates over the last couple years, only 18% expect mortgage rates to go down in the next 12 months. Overall, the full index is up 4.9 points year over year.
“Mortgage rates once again breached the 7-percent mark in August, hitting a 22-year high and doing no favors for consumer sentiment,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “Consumers remain pessimistic toward the housing market in general and homebuying conditions in particular. The overall HPSI is maintaining the low-level plateau set a few months back, and we don’t see much upside to the index in the near future, barring significant improvements to home affordability, which we also don’t expect.
Among the HPSI component highlights:
Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home remained unchanged at 18%, while the percentage who say it is a bad time to buy remained unchanged at 82%.
Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 64% to 66%, while the percentage who say it’s a bad time to sell decreased from 36% to 34%.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged at 41%, while the percentage who say home prices will go down increased from 24% to 26%. The share that thinks home prices will stay the same decreased from 34% to 33%.
Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 16% to 18%, while the percentage who expect mortgage rates to go up increased from 45% to 46%. The share that thinks mortgage rates will stay the same decreased from 38% to 34%.
Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 80% to 78%, while the percentage who say they are concerned increased from 20% to 22%.
Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 19% to 22%, while the percentage who say their household income is significantly lower increased from 10% to 12%. The percentage who say their household income is about the same decreased from 71% to 65%.
