Home Purchase Sentiment Index Caps Off Strong 2019 Near Its Survey High

HPSI's Strength Supportive of Upgraded Housing Forecast for 2020

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) remained mostly flat in December, increasing 0.2 points to 91.7 and inching nearer the survey high set in August. Three of the six HPSI components increased month over month, including the percentage of Americans who believe that home prices will go up over the next 12 months, which rose from 44% to 50%. Year over year, the HPSI is up 8.2 points, driven primarily by consumers’ favorable mortgage rate expectations and a growing share reporting it’s a good time to buy a home.

During much of 2019 consumers reported being held back by high home prices and the shortage of houses available for purchase. However, partly in response to evidence from the HPSI demonstrating strong consumer sentiment, Fannie Mae’s most recent macroeconomic outlook incorporated upgrades to the 2020 forecasts for single-family housing starts, new home sales, and mortgage originations.

“The continued strength in the HPSI attests to the intention among consumers to purchase homes. This is consistent with the Fannie Mae forecast for 2020,” said Doug Duncan, Senior Vice President and Chief Economist. “The HPSI hit and remained near an all-time high in 2019, driven by the 16-percentage point year-over-year increase in the share of consumers believing it is a good time to buy. The HPSI’s strength supports our prediction of a healthy housing market in 2020, as well as consumers’ appetite and ability to absorb the expected increase in entry-level inventory.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2019 Home Purchase Sentiment Index (HPSI) increased in December by 0.2 points to 91.7. The HPSI is up 8.2 points compared to the same time last year. Read the full research report for additional information.

• Good/Bad Time to Buy: The percentage of Americans who say it is a good time to buy decreased this month from 61% to 59%, while the percentage who say it is a bad time to buy increased from 29% to 32%. As a result, the net share of Americans who say it is a good time to buy decreased 5 percentage points.
• Good/Bad Time to Sell: The percentage of Americans who say it is a good time to sell decreased this month from 66% to 65%, while the percentage who say it’s a bad time to sell decreased from 26% to 22%. As a result, the net share of those who say it is a good time to sell increased 3 percentage points.
• Home Price Expectations: The percentage of Americans who say home prices will go up in the next 12 months increased this month from 44% to 50%, while the percentage who said home prices will go down stayed the same at 10%. The share who think home prices will stay the same decreased from 40% to 35%. As a result, the net share of Americans who say home prices will go up increased 6 percentage points.
• Mortgage Rate Expectations: The percentage of Americans who say mortgage rates will go down in the next 12 months decreased this month from 11% to 7%, while the percentage who expect mortgage rates to go up remained flat at 39%. The share who think mortgage rates will stay the same increased from 42% to 46%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months fell 4 percentage points.
• Job Concerns: The percentage of Americans who say they are not concerned about losing their job in the next 12 months remained flat at 86%, while the percentage who say they are concerned decreased from 14% to 12%. As a result, the net share of Americans who say they are not concerned about losing their job rose 2 percentage points.
• Household Income: The percentage of Americans who say their household income is significantly higher than it was 12 months ago remained the same at 28%, while the percentage who say their household income is significantly lower increased from 10% to 11%. The percentage who say their household income is about the same remained flat at 60%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 1 percentage point.

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 December 2019 National Housing Survey was conducted between December 1, 2019 and December 19, 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 December 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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Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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.