Home Purchase Sentiment Index Posts Lowest Reading in Last 18 Months, Falling to 80.2 in March

Consumers' Outlook on Selling a Home Weakens and Job Confidence Dips

Katie Penote

202-752-2261

WASHINGTON, DC – Fannie Mae’s Home Purchase Sentiment Index™ (HPSI) decreased 2.5 points to 80.2 in March. Four of the six HPSI components fell in March, and the survey shows a more negative consumer outlook on the direction of the economy. The largest drop among the HPSI components was the net share of consumers who think now is a good time to sell a home, which fell by 8 percentage points. Despite the Bureau of Labor Statistics’ March employment report showing strong job creation and continued expansion of the labor force, HPSI respondents surveyed in March noted that their confidence about not losing their job decreased 7 percentage points on net and fell from an all-time survey high in February. In addition, the Household Income component fell 4 percentage points on net with fewer consumers reporting that their income was significantly higher than it was 12 months ago.

“Growing pessimism over the last three months about the direction of the economy seems to be spilling over into home purchase sentiment,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The gap between the share of consumers who think the economy is on the wrong track and the share who think it is on the right track has widened, nearly matching its reading last August, when concerns regarding China and oil prices led to the biggest stock market plunge in years. In turn, we saw dips this month in income growth perceptions, attitudes about the home selling climate, and job confidence, all of which contributed to the lowest HPSI reading in the last year and a half. These declines seem to be at odds with recent news of solid overall job creation, but may reflect weakening economic performance in certain industries.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s March 2016 Home Purchase Sentiment Index (HPSI) fell 2.5 percentage points in March to 80.2. Overall, the HPSI is down 1.5 points since this time last year.

• The net share of respondents who say that it is a good time to buy a house fell 2 percentage points to 33% as more Americans say it is a bad time to buy.
• The net percentage of those who say it is a good time to sell a house fell 8 percentage points to negative 1%, as more feel it is a bad time to sell than a good time to sell for the first time in over a year.
• The net share of respondents who say that home prices will go up rose 1 percentage point to 34%, breaking the downward trend from the last few months.
• The net share of those who say mortgage interest rates will go down rose 5 percentage points to negative 45% this month, as fewer consumers say mortgage rates will go down, continuing the trend from February.
• The net share of respondents who say they are not concerned with losing their job fell 7 percentage points to 68%.
• The net share of respondents who say their household income is significantly higher than it was 12 months ago fell 4 percentage points to 11%.

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 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 60 percent of respondents via their cell phones (as of October 2014). To reflect the growing share of households with a cell phone but no landline, the National Housing Survey has increased its cell phone dialing rate to 60 percent as of October 2014. 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 March 2016 National Housing Survey was conducted between March 1, 2016 and March 21, 2016. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the March 2016 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 Consumer Attitude Measures page on fanniemae.com. Also available on the site are in-depth topic analyses, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

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