Housing Sentiment Regains Momentum After July Stumble

Rhea-AI Summary

Fannie Mae's Home Purchase Sentiment Index (HPSI) rose by 3.3 points to 77.5 in August 2020, showing a recovery after a slight dip in July. This increase was attributed to near-record low mortgage rates, improving consumers' outlook on homebuying and selling. However, the HPSI is down 16.3 points year-over-year. Key components include a rise in positivity about buying (59%) and selling (48%), but a decrease in expectations for home price increases (33%). Job security concerns showed slight improvement, with 78% feeling secure about their employment.

Positive

• HPSI increased 3.3 points to 77.5 in August.
• 59% of respondents believe it's a good time to buy a home, up from 53%.
• 48% think it's a good time to sell, up from 45%.
• 78% of respondents are not concerned about job loss, up from 76%.
• 25% report household income significantly higher than last year, up from 22%.

Negative

• HPSI is down 16.3 points year-over-year.
• Expectations for home price increases decreased to 33% from 35%.
• Concerns about home prices going down increased to 26%.

WASHINGTON, Sept. 8, 2020 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) increased 3.3 points in August to 77.5, recovering after falling slightly in July and continuing the rebound from May and June. Five of the six HPSI components increased month over month, with consumers reporting a more optimistic view of both homebuying and home-selling conditions, but a slightly more pessimistic view of expected home price growth. Year over year, the HPSI is down 16.3 points.

"The HPSI rose modestly in August, recovering the ground it lost in July," said Doug Duncan, Senior Vice President and Chief Economist. "The HPSI's recovery was driven by near-record low mortgage rates that helped restore much of consumers' positivity on whether it is a good time to buy a home, while also improving the good-time-to-sell sentiment. The August survey was conducted as consumers continue to face uncertainty regarding schools' and businesses' reopening plans and as the CARES Act $600-per-week income supplement expired."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased in August by 3.3 points to 77.5. The HPSI is down 16.3 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 increased from 53% to 59%, while the percentage who say it is a bad time to buy decreased from 38% to 35%. As a result, the net share of Americans who say it is a good time to buy increased 9 percentage points.
• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 45% to 48%, while the percentage who say it's a bad time to sell remained decreased from 48% to 44%. As a result, the net share of those who say it is a good time to sell increased 7 percentage points.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased this month from 35% to 33%, while the percentage who said home prices will go down increased from 23% to 26%. The share who think home prices will stay the same was unchanged at 34%. As a result, the net share of Americans who say home prices will go up decreased 5 percentage points.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased this month from 16% to 17%, while the percentage who expect mortgage rates to go up decreased from 35% to 33%. The share who think mortgage rates will stay the same increased from 42% to 45%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 3 percentage points.
• Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 76% to 78%, while the percentage who say they are concerned decreased from 23% to 22%. As a result, the net share of Americans who say they are not concerned about losing their job increased 3 percentage points.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 22% to 25%, while the percentage who say their household income is significantly lower was unchanged at 16%. The percentage who say their household income is about the same decreased from 62% to 59%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 3 percentage points.

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). As cell phones have become common and many households no longer have landline phones, the NHS contacts 70 percent of respondents via their cell phones (as of January 2018). 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 August 2020 National Housing Survey was conducted between August 1, 2020 and August 23, 2020. 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 August 2020 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 Americans. 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 is the recent trend in Fannie Mae's Home Purchase Sentiment Index for August 2020?

The HPSI increased by 3.3 points to 77.5 in August 2020.

How does August 2020 HPSI compare to the previous year?

The August 2020 HPSI is down 16.3 points compared to August 2019.

What percentage of consumers think it's a good time to buy a home according to the August 2020 survey?

In August 2020, 59% of respondents felt it was a good time to buy a home.

What are the mortgage rate expectations from the August 2020 survey?

In August 2020, 17% of respondents expected mortgage rates to go down in the next 12 months.

How are consumers feeling about job security according to the August 2020 HPSI?

78% of respondents reported not being concerned about job loss in the next 12 months.