Homebuying and Selling Sentiment Remain Polarized Amid Affordability and Supply Concerns

Rhea-AI Summary

The Home Purchase Sentiment Index (HPSI) from Fannie Mae decreased by 3.9 points to 75.8 in July, reflecting ongoing concerns about high home prices and limited inventory. Notably, 66% of respondents believe it's a bad time to buy, while 75% think it's a good time to sell. Year-over-year, the index is up 1.6 points. The survey also shows a decline in optimism about home prices and job stability, with only 46% expecting prices to rise. These findings indicate increased pessimism among key demographics, particularly those aged 35-44.

Positive

• Overall HPSI is up 1.6 points year-over-year.
• Selling sentiment remains high, above pre-pandemic levels.

Negative

• HPSI decreased 3.9 points month-over-month.
• 66% of respondents view it as a bad time to buy.
• Concerns about job security rose, with 84% not worried about job loss.

WASHINGTON, Aug. 9, 2021 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased 3.9 points to 75.8 in July, as consumers continue to report concerns related to high home prices and a lack of homes for sale. While all six components declined month over month, the "Good Time to Buy" and "Good Time to Sell" components once again produced the most notable results. On the buy-side, 66 percent of respondents said it's a bad time to buy a home, up from 64 percent last month; while on the sell-side, 75 percent of respondents said it's a good time to sell, down slightly from 77 percent last month. Year over year, the overall index is up 1.6 points.

"Historically prime homebuying groups appear to be increasingly sensitive to the lack of affordability, as home prices continue to increase and homes for sale remain in short supply," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "While all surveyed consumer segments have reported increased pessimism toward homebuying conditions over the past several months, two of the segments perhaps best positioned to purchase -- consumers aged 35-44 and those with middle-to-higher income levels – have indicated even more pessimism than other groups."

"Overall, the HPSI remains within a tight range established a few months after the onset of the pandemic in 2020. Consumer sentiment toward homebuying hit yet another survey low in July, continuing the sharp downward trend established in March. The percentage of respondents citing high home prices as the top reason for it being a 'bad time to buy' also reached an all-time high. On the flip side, selling sentiment remains extremely high, and well above pre-pandemic levels, for the same commonly cited reason: high home prices."

Home Purchase Sentiment Index – Component Highlights
Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased in July by 3.9 points to 75.8. The HPSI is up 1.6 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 64% to 66%. As a result, the net share of those who say it is a good time to buy decreased 6 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 decreased from 77% to 75%, while the percentage who say it's a bad time to sell increased from 15% to 20%. 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 decreased from 48% to 46%, while the percentage who say home prices will go down remained unchanged at 21%. The share who think home prices will stay the same increased from 25% to 27%. 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 6% to 5%, while the percentage who expect mortgage rates to go up remained unchanged at 57%. The share who think mortgage rates will stay the same increased from 30% to 31%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 1 percentage point 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 88% to 84%, while the percentage who say they are concerned increased from 11% to 13%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 6 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 remained unchanged at 27%, while the percentage who say their household income is significantly lower increased from 13% to 14%. The percentage who say their household income is about the same remained unchanged at 56%. 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 July 2021 National Housing Survey was conducted between July 1, 2021 and July 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 July 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 caused the decline in Fannie Mae's Home Purchase Sentiment Index in July 2021?

The HPSI decreased by 3.9 points to 75.8, driven by concerns over high home prices and limited availability of homes.

How does the HPSI in July 2021 compare to the previous year?

The HPSI is up 1.6 points compared to July 2020.

What percentage of respondents think it's a bad time to buy a home according to Fannie Mae's July 2021 survey?

66% of respondents believe it's a bad time to buy a home.

What percentage of people feel it is a good time to sell a home according to the latest HPSI?

75% of respondents think it's a good time to sell a home.

What were the expectations for home prices in the next 12 months as per the July 2021 survey?

Only 46% of respondents expect home prices to rise in the next year, down from 48%.