No Thanks to Housing, Home Purchase Sentiment Edges Up

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased in August for the first time since May, edging up 1.5 points to 88.0. The uptick can be attributed to increases in the job- and income-related HPSI components. The net share of Americans who said they are not concerned about losing their job increased by 15 percentage points in August, more than recovering last month’s 11 percentage point decrease and offsetting decreases in the housing market components. Additionally, the net share of survey respondents who said their household income is significantly higher than it was 12 months ago gained 1 percentage point. However, the other housing components were largely negative, including the net share of survey respondents who said now is a good time to buy a home, which fell 3 percentage points, as well as the net share who said it is a good time to sell a home, which also fell 3 percentage points. Finally, the net share of respondents who said that home prices will go up in the next 12 months decreased 1 percentage point.

“Consumers are attuned to the divergence between the slowing housing market and strong macro economy,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Consumers were less optimistic this month about both homebuying and home selling conditions, while perceptions of income growth and confidence about job security are at survey highs. After years of robust home price growth outpacing income growth, consumers face significant housing affordability challenges at the low end of the market.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2018 Home Purchase Sentiment Index (HPSI) increased in August by 1.5 points to 88.0, increasing for the first time since May. The HPSI is unchanged compared with the same time last year.

• The net share of Americans who say it is a good time to buy a home fell 3 percentage points from last month to 21%.
• The net share of those who say it is a good time to sell a home fell 3 percentage points from last month to 38%.
• The net share of those who say home prices will go up fell 1 percentage point to 38%, remaining below 40% for two consecutive months for the first time since December 2016.
• The net share of Americans who say mortgage rates will go down over the next 12 months remained unchanged at -52%.
• The net share of Americans who say they are not concerned about losing their job rose 15 percentage points to 80% after last month’s steep decline, reaching a new survey high.
• The net share of those who say their household income is significantly higher than it was 12 months ago rose 1 percentage point to 22%, reaching a new survey high for the second consecutive 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 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 August 2018 National Housing Survey was conducted between August 1, 2018 and August 26, 2018. 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 August 2018 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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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.