High Home Prices Continue to Weigh on Homebuying Sentiment

Rhea-AI Summary

The Fannie Mae Home Purchase Sentiment Index (HPSI) fell by 1.2 points to 74.5 in September, reflecting consumers' negative perceptions about buying homes, with 66% stating it's a bad time to buy. Year-over-year, the index is down 6.5 points. While the sentiment for selling remains favorable, concerns persist about high home prices. Expectations for home price increases have softened, with only 37% anticipating a rise in the next year, down from 40%. Meanwhile, mortgage rate expectations have also shifted, with a slight increase in respondents who expect a decrease in rates.

Positive

• The home-selling sentiment remains strong, with 74% believing it's a good time to sell, up from 73%.
• The percentage of respondents expecting mortgage rates to decrease increased from 6% to 8%.

Negative

• The HPSI's decrease indicates declining consumer confidence in homebuying.
• 66% of respondents view it as a bad time to buy a home, up from 63% last month.
• Expectations for home price increases have decreased to 37%.
• Job security concerns increased, with 16% expressing worry about job loss.

WASHINGTON, Oct. 7, 2021 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased 1.2 points to 74.5 in September, as survey respondents continued to report divergent opinions of homebuying and home-selling conditions. Overall, three of the index's six components decreased month over month. Most notably, an even greater share of consumers reported that it's a bad time to buy a home – with that number now sitting at 66 percent, up from 63 percent last month and significantly higher than the 28% of respondents who believe it's a good time to buy. The home-selling conditions component remained mostly flat, with a strong majority of consumers maintaining that it's a good time to sell. Year over year, the full index is down 6.5 points.

"The HPSI declined slightly this month but remains within the general bounds we've seen since the end of last year," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "The survey's story is also largely unchanged: Consumers feel it's a bad time to buy a home but a good time to sell – and they continue to cite high home prices as the primary reason. Across all consumer segments, renters and younger consumers were slightly more likely to indicate it's a bad time to buy, perhaps a reflection of their generally lower incomes and their observation that the availability of affordable homes is lacking. We're also seeing a softening in consumers' expectations that home prices will continue to increase; however, in our view, other housing market fundamentals remain supportive of further home price appreciation – including low levels of inventory and low interest rates." 

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased in September by 1.2 points to 74.5. The HPSI is down 6.5 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 32% to 28%, while the percentage who say it is a bad time to buy increased from 63% to 66%. As a result, the net share of those who say it is a good time to buy decreased 7 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 increased from 73% to 74%, while the percentage who say it's a bad time to sell remained unchanged at 19%. 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 40% to 37%, while the percentage who say home prices will go down remained unchanged at 24%. The share who think home prices will stay the same increased from 31% to 33%. As a result, the net share of Americans who say home prices will go up decreased 3 percentage points month over month.
  
  
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 8%, while the percentage who expect mortgage rates to go up decreased from 53% to 51%. The share who think mortgage rates will stay the same decreased from 35% to 33%. 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 decreased from 82% to 81%, while the percentage who say they are concerned increased from 15% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 2 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 26% to 27%, 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 59% to 57%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago remained unchanged 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 September 2021 National Housing Survey was conducted between September 1, 2021 and September 26, 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 September 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 was the Fannie Mae Home Purchase Sentiment Index for September 2021?

The HPSI decreased by 1.2 points to 74.5 in September 2021.

How much has the HPSI dropped year-over-year?

The HPSI is down 6.5 points compared to the same time last year.

What percentage of consumers believe it's a bad time to buy a home?

66% of consumers reported it's a bad time to buy a home.

What are the mortgage rate expectations according to the latest HPSI?

8% of respondents expect mortgage rates to decrease in the next 12 months.

How did the sentiment for selling homes change in September 2021?

The sentiment for selling slightly increased, with 74% believing it's a good time to sell.