Housing Confidence Dips Slightly, Remains Near Survey High on Improved Mortgage Rate Expectations

Mounting Supply, Affordability Concerns Continue to Pose Downside Risk to HPSI

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) decreased 0.5 points in June to 91.5 after nearing its survey high last month. An 8-percentage point increase in the net “Mortgage Rates Will Go Down” component was more than offset by the index’s other five components, all of which were either negative or flat in June, highlighted by “Good Time to Buy,” which fell 4 percentage points this month.

“Growing expectations that mortgage rates will remain steady suggest improved stability for housing affordability and helped keep the HPSI relatively flat this month, despite modest declines in other components,” said Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae. “Regional variations in housing optimism appear to be tied to a divergence in housing affordability; for example, home purchase sentiment is higher in the Midwest and South than in the West and, to a lesser extent, the Northeast, where the lack of entry-level inventory and the resultant strong price appreciation has had a more profound impact on affordability. With fewer consumers expecting rates to jump back up – thereby creating less urgency to buy now – we expect housing market activity to remain stable.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2019 Home Purchase Sentiment Index (HPSI) decreased in June by 0.5 points to 91.5. The HPSI is up 0.8 points compared to the same time last year.

• The net share of Americans who say it is a good time to buy a home decreased 4 percentage points to 23%. This component is down 5 percentage points from the same time last year.
• The net share of those who say it is a good time to sell a home remained unchanged at 43%. This component is down 4 percentage points from the same time last year.
• The net share of those who say home prices will go up over the next 12 months decreased 3 percentage points to 38%. This component is down 8 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 8 percentage points to -29%. This component is up 24 percentage points from the same time last year.
• The net share of Americans who say they are not concerned about losing their job over the next 12 months decreased 3 percentage points to 73%. This component is down 3 percentage points 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 decreased 1 percentage point to 20%. This component is up 1 percentage point 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 June 2019 National Housing Survey was conducted between June 1, 2019 and June 24, 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 June 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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