Housing Sentiment Inches Higher, Driven by Mortgage Rate Outlook

Favorable Rate Environment Expected to Support Increased Refinance Mortgage Activity

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) increased 0.1 points in August to 93.8, another new survey high. Despite five of the six HPSI components remaining flat or decreasing month over month, an increase of 11 percentage points in the net “Mortgage Rates Will Go Down” component drove the index slightly higher. On a year-over-year basis, the forward-looking mortgage rates component is up 35 percentage points.

“Growing expectations that mortgage rates will remain flat or decline are reflected in the HPSI’s latest reading, which is now at a survey high even though other indicators of economic and housing market sentiment are flat to negative,” said Doug Duncan, Senior Vice President and Chief Economist. “Unfortunately, much of the lower interest rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy. We do expect housing market activity to remain relatively stable, and the favorable rate environment should continue supporting increased refinance activity.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s 2019 Home Purchase Sentiment Index (HPSI) increased in August by 0.1 points to 93.8. The HPSI is up 5.8 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 1 percentage point to 25%. This component is up 4 percentage points from the same time last year.
• The net share of those who say it is a good time to sell a home decreased 4 percentage points to 40%. This component is up 2 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 1 percentage point to 36%. This component is down 2 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 11 percentage points to -17%. This component is up 35 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 4 percentage points to 77%. 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 remained unchanged at 21%. This component is down 1 percentage point from the same time last year.

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 2019 National Housing Survey was conducted between August 1, 2019 and August 22, 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 August 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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Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.