Housing Confidence Loses Momentum

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) fell 1.6 points in June to 90.7 after reaching new survey highs in April and May. The decline can be attributed to decreases in four of the six HPSI components. The net share of respondents who said now is a good time to buy a home remained unchanged in June. However, the net share who reported that now is a good time to sell a home increased 1 percentage point month over month. Americans expressed a decreased sense of job security, with the net share who say they are not concerned about losing their job falling 2 percentage points this month. Additionally, the net share reporting that their income is significantly higher than it was 12 months ago decreased 2 percentage points in June. Finally, the net share of consumers who said mortgage rates will go down over the next 12 months fell 4 percentage point this month, while the net share who said home prices will go up in the next 12 month decreased 3 percentage points.

“After several years of steadily climbing, HPSI’s slowing upward trend suggests the index may be reaching a plateau,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Tight supply and lackluster income growth continue to weigh on housing activity, and consumer expectations for home price growth over the next 12 months have moderated. However, consumers expressed increased optimism about the direction of the economy and their personal financial situations over the next 12 months, with both measures matching previous survey highs this month.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2018 Home Purchase Sentiment Index (HPSI) decreased in June by 1.6 points to 90.7. The HPSI is up 2.4 points compared with the same time last year.

• The net share of Americans who say it is a good time to buy a home remained unchanged at 28%.
• The net share of those who say it is a good time to sell a home rose 1 percentage points to 47%, reaching a new survey high for the third straight month.
• The net share of Americans who say home prices will go up in the next 12 months fell 3 percentage points from last month to 46%.
• The net share of those who say mortgage rates will go down over the next 12 months decreased 4 percentage points to -53%.
• The net share of Americans who say they are not concerned about losing their job fell 2 percentage points from last month’s survey high to 76%.
• The net share of those who say their household income is significantly higher than it was 12 months ago fell 2 percentage points to 19%.

ABOUT FANNIE MAE’S HOME PURCHASE SENTIMENT INDEX

The Home Purchase Sentiment Index (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey® (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

ABOUT FANNIE MAE’S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 70 percent of respondents via their cell phones (as of January 2018). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The June 2018 National Housing Survey was conducted between June 1, 2018 and June 25, 2018. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by PSB, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the June 2018 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.