HPSI Dips, Ends 2017 on a Cautious Note

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index^® (HPSI) decreased 2.0 points in December to 85.8, reversing last month’s rise. The decrease can be attributed to decreases in four of the six HPSI components. The net share of respondents who said now is a good time to buy a home decreased 5 percentage points compared to November and is down 8 percentage points compared to the same period last year. Meanwhile, the net share who reported that now is a good time to sell a home remained flat and is up 21 percentage points year-over-year. The net share who said home prices will go up in the next 12 months decreased 2 percentage points in December, while Americans also expressed a weakened sense of job security, with the net share who say they are not concerned about losing their job decreasing 6 percentage points. Finally, the net share of consumers who said mortgage rates will go down over the next 12 months fell 1 percentage point in December, while the net share reporting that their income is significantly higher than it was 12 months ago rose 2 percentage points. 

“Consumers remained cautious in their housing outlook at the end of 2017, as tax reform discussions continued. In December, mirroring the other major consumer sentiment benchmarks, the HPSI reflected this caution and declined slightly,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets, where consumer expectations for price increases over the next 12 months reached a new survey high.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2017 Home Purchase Sentiment Index (HPSI) decreased in December by 2.0 points to 85.8. The HPSI is up 5.1 points compared with the same time last year.

• The net share of Americans who say it is a good time to buy a home fell 5 percentage points to 24%, erasing much of last month’s rise.
• The net percentage of those who say it is a good time to sell remained unchanged at 34%.
• The net share of Americans who say home prices will go up fell 2 percentage points to 44% in December.
• The net share of those who say mortgage rates will go down over the next 12 months fell 1 percentage point to -52%.
• The net share of Americans who say they are not concerned about losing their job fell by 6 percentage points to 68%.
• The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 2 percentage points to 16%. 

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 60 percent of respondents via their cell phones (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 December 2017 National Housing Survey was conducted between December 1, 2017 and December 18, 2017. 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 2017 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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