Economic Pessimism Hits 10-Year High, but Consumer Sentiment Toward Housing Remains Flat

Rhea-AI Summary

The Fannie Mae Home Purchase Sentiment Index (HPSI) fell by 0.8 points to 74.7 in November, marking a 5.3-point drop year-over-year. Despite increasing economic pessimism, 74% of respondents believe it's a good time to sell, while only 29% think it's a good time to buy. Concerns about job security slightly eased, and expectations for rising mortgage rates intensified, with 58% anticipating higher rates. Overall, consumer sentiment on housing remained stable amid heightened macroeconomic concerns.

Positive

• 74% of respondents feel it's a good time to sell a home.
• Job security concerns have eased, nearing pre-COVID levels.
• 45% of respondents expect home prices to rise over the next 12 months.

Negative

• HPSI decreased 0.8 points month over month.
• Economic pessimism reached a 10-year high, with 70% of respondents believing the economy is on the wrong track.
• Only 29% of respondents believe it's a good time to buy a home.

WASHINGTON, Dec. 7, 2021 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased 0.8 points to 74.7 in November, as consumers expressed not only disparate views of homebuying and home-selling conditions but also their greatest economic pessimism in 10 years. Overall, four of the index's six components decreased month over month. In November, 74% of respondents reported that it's a good time to sell a home, compared to the 29% of consumers who reported that it's a good time to buy. Consumers also continued to report strong expectations that mortgage rates will increase over the next 12 months, and they expressed even greater pessimism about the direction of the economy, with 70% saying it's on the wrong track. Year over year, the full index is down 5.3 points.

"The HPSI experienced some shuffling among its underlying components in November, but the overall index once again stayed relatively flat," said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist. "While consumers expressed even greater concern regarding the direction of the economy, with the share of respondents expressing pessimism hitting a 10-year high, overall housing sentiment remained stable. Consumers' concerns for their personal job situation have eased and respondents also reported feeling better about their income level compared to a year ago, with both of those components now nearing their pre-COVID levels."

Palim continued: "Even though consumers are reporting broader macroeconomic concerns – with much of it likely tied to inflation – so far any negative sentiment tied to the economy has not translated into a meaningful decrease in actual purchase mortgage demand. According to this month's survey, an even greater share of consumers (particularly those with low and moderate incomes) expects mortgage rates to go up in the next 12 months, which may be a signal that some households plan to pull-forward their home purchase plans despite growing economic apprehension."

Home Purchase Sentiment Index – Component Highlights
Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased in November by 0.8 points to 74.7. The HPSI is down 5.3 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 30% to 29%, while the percentage who say it is a bad time to buy decreased from 65% to 64%. As a result, the net share of those who say it is a good time to buy remained unchanged 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 77% to 74%, while the percentage who say it's a bad time to sell increased from 17% to 21%. As a result, the net share of those who say it is a good time to sell decreased 7 percentage points month over month.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 39% to 45%, while the percentage who say home prices will go down decreased from 22% to 21%. The share who think home prices will stay the same decreased from 32% to 28%. As a result, the net share of Americans who say home prices will go up increased 7 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 5%, while the percentage who expect mortgage rates to go up increased from 55% to 58%. The share who think mortgage rates will stay the same decreased from 33% to 32%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 3 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 84% to 83%, while the percentage who say they are concerned remained unchanged at 15%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 1 percentage point month over month.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago remained unchanged at 23%, while the percentage who say their household income is significantly lower increased from 12% to 13%. The percentage who say their household income is about the same decreased from 62% to 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 1 percentage point 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 November 2021 National Housing Survey was conducted between November 1, 2021 and November 17, 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 November 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 people 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 | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

Fannie Mae Newsroom
https://www.fanniemae.com/news

Photo of Fannie Mae
https://www.fanniemae.com/resources/img/about-fm/fm-building.tif

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.

View original content:https://www.prnewswire.com/news-releases/economic-pessimism-hits-10-year-high-but-consumer-sentiment-toward-housing-remains-flat-301439135.html

SOURCE Fannie Mae

FAQ

What is the current Home Purchase Sentiment Index (HPSI) for FNMA?

The current HPSI for FNMA is 74.7 as of November.

How much did the HPSI decrease in November 2021 for FNMA?

The HPSI for FNMA decreased by 0.8 points in November 2021.

What percentage of respondents think it's a good time to buy a home according to FNMA?

Only 29% of respondents believe it's a good time to buy a home.

What economic sentiment did consumers express in the FNMA survey?

Consumers expressed their greatest economic pessimism in 10 years, with 70% saying the economy is on the wrong track.

What are the mortgage rate expectations among consumers in the FNMA survey?

58% of respondents expect mortgage rates to increase in the next 12 months.