Consumer sentiment toward the housing market took a significant jump in January, as more Americans reported that their household income had increased, according to Fannie Mae’s Home Purchase Sentiment Index.
The net share of respondents who said their household income was significantly higher than it was 12 months earlier increased eight percentage points to 27%.
That’s up 11 percentage points compared with January 2018.
Overall, the HPSI increased 1.2 points to a score of 84.7.
The net share of Americans who said it was a good time to buy a home increased four percentage points to 15%. However, that’s down 12 percentage points compared with the same time last year.
The net share who said it was a good time to sell a home decreased one percentage point to 35%. That’s down three percentage points compared with January 2018.
The net share who said home prices will go up fell one percentage point to 30% was down 22 percentage points compared with January last year.
The net share who said mortgage rates will go down over the next 12 months increased three percentage points to -53%. That’s down three percentage points compared with a year earlier.
“Movement among the HPSI components points to possible housing affordability relief at the start of 2019,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a statement. “The net share of consumers expecting home prices to increase over the next year has declined further, falling to the lowest level since late 2012.
“Meanwhile, consumer perceptions of household income growth have improved, with the net share noting rising income over the past year hitting a survey high,” Duncan said. “Furthermore, fewer consumers since last summer, on net, believe that mortgage rates will rise over the next year – a sentiment consistent with the Fed’s statement at its January meeting that it will be patient with future target rate adjustments.
“Overall, these results are in line with our forecast that, amid improving affordability conditions, home sales should stabilize in 2019 after declining last year for the first time in four years.”