Housing Sentiment Drifts Lower as Affordability Constraints Sharpen

WASHINGTON, DC – The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) decreased 2.4 points to 71.8 in January, its lowest level since May 2020, as affordability constraints continue to weigh on the housing market. Overall, four of the index’s six components decreased month over month, including the components measuring consumers’ perceptions of homebuying and home-selling conditions. In January, a survey record-low 25% of respondents reported that it’s a good time to buy a home, compared to the 69% of consumers who reported that it’s a good time to sell. Consumers also reported greater concerns about job stability and the future path of mortgage rates. Year over year, the full index is down 5.9 points.

“Consumer sentiment toward housing softened further in January – the HPSI fell 2.4 points to 71.8 – as affordability and supply constraints continue to limit home purchase opportunities, particularly among younger households,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Younger consumers – more so than other groups – expect home prices to rise even further, and they also reported a greater sense of macroeconomic pessimism.  Additionally, while the younger respondents are typically the most optimistic about their future finances, this month their sense of optimism around their personal financial situation declined. All of this points back to the current lack of affordable housing stock, as younger generations appear to be feeling it particularly acutely and, absent an uptick in supply, may have their homeownership aspirations delayed. On the whole, the latest HPSI results are consistent with our forecast of slowing housing activity in the coming year.”

Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in January by 2.4 points to 71.8. The HPSI is down 5.9 points compared to the same time last year. Read the full research report for additional information.

• Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 26% to 25%, while the percentage who say it is a bad time to buy increased from 66% to 70%. As a result, the net share of those who say it is a good time to buy decreased 5 percentage points month over month.
• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 76% to 69%, while the percentage who say it’s a bad time to sell increased from 17% to 22%. As a result, the net share of those who say it is a good time to sell decreased 12 percentage points month over month.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 44% to 43%, while the percentage who say home prices will go down decreased from 19% to 14%. The share who think home prices will stay the same increased from 30% to 35%. As a result, the net share of Americans who say home prices will go up increased 4 percentage points month over month.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months remained unchanged at 4%, while the percentage who expect mortgage rates to go up increased from 56% to 58%. The share who think mortgage rates will stay the same decreased from 30% to 28%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 2 percentage points month over month.
• Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 82% to 78%, while the percentage who say they are concerned increased from 16% to 17%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 5 percentage points month over month.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago remained increased from 23% to 26%, while the percentage who say their household income is significantly lower decreased from 17% to 14%. The percentage who say their household income is about the same decreased from 59% to 56%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 6 percentage points month over month.

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 respondents 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). 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 support the housing market. The January 2022 National Housing Survey was conducted between January 1, 2022 and January 24, 2022. 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 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.

To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.