Housing Sentiment Rebounds, Returns to Likely Plateau

Rhea-AI Summary

The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased by 3.2 points in June to 72.6, marking a rebound from the previous month's dip and nearing an earlier plateau. Consumer optimism regarding homebuying conditions rose, with 19% considering it a good time to buy, up from 14% in May. The sentiment that it's a good time to sell also increased to 66%. Job security perceptions improved, with 79% feeling secure. However, affordability concerns persist, with expectations for rising home prices and mortgage rates. Year-over-year, the HPSI saw a 6.6-point increase.

Positive

• Fannie Mae's Home Purchase Sentiment Index (HPSI) increased by 3.2 points in June to 72.6.
• The HPSI is up 6.6 points year-over-year.
• Consumer sentiment that it is a good time to buy a home increased from 14% to 19%.
• The perception that it is a good time to sell a home rose from 64% to 66%.
• Job security sentiment improved, with 79% of respondents feeling secure, up from 75%.

Negative

• Affordability concerns continue to dominate consumer housing sentiment.
• Expectations for rising home prices and mortgage rates persist.
• The percentage of respondents reporting higher household income decreased from 20% to 16%.

Consumers Slightly More Optimistic about Homebuying and Home-Selling Conditions, But Affordability Pessimism Persists

WASHINGTON, July 8, 2024 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) increased 3.2 points in June to 72.6, rebounding from last month's dip and returning the index nearer the plateau it set earlier this year. This month, 19% of consumers indicated that it's a good time to buy a home, up from 14% in May, which represented a new survey low. The share believing it's a good time to sell also increased, rising from 64% to 66%. Greater shares of consumers also indicated belief that home prices and mortgage rates would rise over the next 12 months. Among the household finance components, the percentage of consumers expressing a sense of job security jumped to 79%, an increase of 4 percentage points compared to May. The full index is up 6.6 points year over year.

"Affordability concerns remain the primary driver of consumer housing sentiment, even as the topline findings from our monthly survey showed a modest uptick in optimism on both homebuying and home-selling conditions," said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist. "If mortgage rates decline through the end of the year, as we currently forecast, we do think home sales activity will pick up, but progress on that front is likely to be slow due to the ongoing imbalance between supply and demand. A significant majority of consumers continue to tell us that it's a 'bad time' to buy a home, and they're also telling us that they expect both home prices and mortgage rates to move higher over the next 12 months. Taken together, in our view, this leaves little upside to overall sentiment until meaningful progress is made on affordability – most likely in the form of either lower rates or improved supply. Of course, the flip side to a difficult purchase market is an advantageous sales market, and respondents also maintained their position that it's a generally good time to sell, pointing to high home prices as the primary reason."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased 3.2 points in June to 72.6. The HPSI is up 6.6 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 increased from 14% to 19%, while the percentage who say it is a bad time to buy decreased from 86% to 81%. As a result, the net share of those who say it is a good time to buy increased 9 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 64% to 66%, while the percentage who say it's a bad time to sell decreased from 35% to 33%. As a result, the net share of those who say it is a good time to sell increased 4 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 42% to 45%, while the percentage who say home prices will go down decreased from 18% to 17%. The share who think home prices will stay the same decreased from 40% to 36%. As a result, the net share of those who say home prices will go up in the next 12 months increased 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 decreased from 25% to 24%, while the percentage who expect mortgage rates to go up increased from 31% to 33%. The share who think mortgage rates will stay the same remained unchanged at 42%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 2 percentage points month over month.
  
  
• Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 75% to 79%, while the percentage who say they are concerned decreased from 24% to 20%. As a result, the net share of those who say they are not concerned about losing their job increased 8 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 decreased from 20% to 16%, while the percentage who say their household income is significantly lower decreased from 12% to 10%. The percentage who say their household income is about the same increased from 67% to 72%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 2 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 National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed attitudinal longitudinal surveys of its kind, 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 June 2024 National Housing Survey was conducted between June 1, 2024 and June 18, 2024. Most of the data collection occurred during the first two weeks of this period. The latest NHS was conducted exclusively through AmeriSpeak^®, NORC at the University of Chicago's probability-based panel, in coordination with Fannie Mae and PSB Insights. Calculations are made using unrounded and weighted respondent level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.

Detailed HPSI & NHS Findings
For detailed findings from the 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 the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:
fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

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https://www.fanniemae.com/news

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Opinions, analyses, estimates, forecasts, beliefs, 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, beliefs, 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, beliefs, 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.

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SOURCE Fannie Mae

FAQ

What is the current value of the Fannie Mae Home Purchase Sentiment Index (HPSI)?

The Fannie Mae HPSI increased by 3.2 points in June to 72.6.

How has consumer sentiment about homebuying changed according to the latest Fannie Mae HPSI?

According to the latest Fannie Mae HPSI, 19% of consumers now believe it's a good time to buy a home, up from 14% in May.

What percentage of respondents think it is a good time to sell a home according to Fannie Mae's latest report?

The percentage of respondents who think it is a good time to sell a home increased to 66%.

How do consumers feel about job security according to the June Fannie Mae HPSI?

According to the June Fannie Mae HPSI, 79% of respondents feel secure in their jobs, a 4-point increase from May.

What are the current expectations for home prices according to Fannie Mae's HPSI?

The percentage of respondents expecting home prices to rise in the next 12 months increased from 42% to 45%.

What are the current expectations for mortgage rates according to the latest Fannie Mae HPSI?

The percentage of respondents expecting mortgage rates to increase in the next 12 months went up from 31% to 33%.

How do consumers view their household income according to Fannie Mae's June HPSI?

The percentage of respondents who say their household income is significantly higher than 12 months ago decreased from 20% to 16%.