Consumer Perception of Homebuying Conditions Worsens as Affordability and Supply Issues Persist

Rhea-AI Summary

The Home Purchase Sentiment Index (HPSI) from Fannie Mae increased by 1.0 points to 80.0 in May 2021. This marks a year-over-year rise of 12.5 points. Notably, respondents reported improved job security and household income. However, sentiment towards homebuying conditions worsened, with only 35% deeming it a good time to buy, a drop from 53% in March. Consumers highlighted high home prices and low supply as significant concerns. Despite challenges, many are still considering purchasing homes, supported by low mortgage rates and enhanced savings.

Positive

• HPSI increased to 80.0, up 1.0 points month-over-month and 12.5 points year-over-year.
• 87% of respondents reported no job loss concerns, an 11 percentage point increase.
• 29% of respondents reported significantly higher household income, a 12 percentage point increase.

Negative

• Only 35% of respondents feel it's a good time to buy, down from 53% in March.
• The net share believing home prices will rise decreased by 2 percentage points to 47%.
• The perception of mortgage rates decreasing also diminished slightly.

WASHINGTON, June 7, 2021 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) remained relatively flat in May, increasing by 1.0 points to 80.0. Four of the HPSI's six components increased month over month, most notably the components related to personal finance, as consumers reported a much greater sense of job security and improved household income compared to the same time last year. However, for the second consecutive month, consumers also reported a significantly more pessimistic view of homebuying conditions; on net, that component fell to an all-time survey low, with only 35% of respondents believing it's a good time to buy a home, down from 53% in March. Year over year, the HPSI is up 12.5 points.

"The HPSI remained relatively flat in May, although some of its underlying components shifted significantly, with consumers feeling substantially more positive about their jobs and income, while at the same time showing even greater pessimism about homebuying conditions compared to last month," said Doug Duncan, Senior Vice President and Chief Economist. "The 'good time to buy' component fell further -- hitting another all-time survey low – as consumers appear to be acutely aware of higher home prices and the low supply of homes, the two reasons cited most frequently for that particular sentiment. However, despite the challenging buying conditions, consumers do appear more intent to purchase on their next move, a preference that may be supported by the expectation of continued low mortgage rates, as well as the elevated savings rate during the pandemic, which may have allowed many to afford a down payment." 

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased in May by 1.0 points to 80.0. The HPSI is up 12.5 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 47% to 35%, while the percentage who say it is a bad time to buy increased from 48% to 56%. As a result, the net share of those who say it is a good time to buy decreased 20 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 remained unchanged at 67%, while the percentage who say it's a bad time to sell decreased from 26% to 25%. As a result, the net share of those who say it is a good time to sell increased 1 percentage point month over month.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 49% to 47%, while the percentage who say home prices will go down remained unchanged at 17%. The share who think home prices will stay the same increased from 27% to 29%. As a result, the net share of Americans who say home prices will go up decreased 2 percentage points month over month.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 7% to 6%, while the percentage who expect mortgage rates to go up decreased from 54% to 49%. The share who think mortgage rates will stay the same increased from 33% to 38%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 4 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 increased from 80% to 87%, while the percentage who say they are concerned decreased from 16% to 12%. As a result, the net share of Americans who say they are not concerned about losing their job increased 11 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 increased from 21% to 29%, while the percentage who say their household income is significantly lower decreased from 17% to 13%. The percentage who say their household income is about the same decreased from 57% to 54%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 12 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 May 2021 National Housing Survey was conducted between May 1, 2021 and May 25, 2021. 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 May 2021 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.

About Fannie Mae
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of people in America. 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:
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Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group 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 as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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SOURCE Fannie Mae

FAQ

What does the Home Purchase Sentiment Index (HPSI) indicate for FNMA shareholders?

The HPSI provides a gauge of consumer attitudes toward homebuying, impacting FNMA's market position and future profitability.

How did consumer confidence change in May 2021 for FNMA?

Consumer confidence in job security rose, with 87% of respondents feeling secure about their jobs.

What are the current homebuying conditions reported by consumers in May 2021?

Only 35% of respondents believe it's a good time to buy a home, reflecting significant pessimism.

What percentage of respondents expect home prices to increase according to the latest FNMA survey?

The percentage expecting home prices to rise decreased to 47% in May 2021.