HPSI Starts the New Year on a Hopeful Note

Consumer Sentiment Suggests Improving Affordability

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased in January, rising 1.2 points to 84.7 and paring some of its recent losses. The increase can be attributed primarily to an 8-percentage point jump in the net share of Americans who reported substantially higher household income today compared to this time last year.

“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. “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. 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.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2018 Home Purchase Sentiment Index (HPSI) increased in January by 1.2 points to 84.7. The HPSI is down 4.8 points compared with the same time last year.

• The net share of Americans who say it is a good time to buy a home increased 4 percentage points from last month to 15%. This component is down 12 percentage points from the same time last year.
• The net share of those who say it is a good time to sell a home decreased 1 percentage point to 35%. This component is down 3 percentage points from the same time last year.
• The net share of those who say home prices will go up fell 1 percentage point to 30%, declining for the fourth consecutive month. This component is down 22 percentage points from the same time last year.
• The net share of Americans who say mortgage rates will go down over the next 12 months increased 3 percentage points to -53%. This component is down 3 percentage points from the same time last year.
• The net share of Americans who say they are not concerned about losing their job decreased 6 percentage points to 73%. This component is unchanged from the same time last year.
• The net share of those who say their household income is significantly higher than it was 12 months ago increased 8 percentage points to 27%. This component is up 11 percentage points from the same time last year.

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 January 2019 National Housing Survey was conducted between January 2, 2019 and January 23, 2019. 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 January 2019 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.

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