Fannie Mae Introduces Home Purchase Sentiment Index To Measure Consumer Attitudes

Posted by Patrick Barnard on September 14, 2015 No Comments
Categories : Residential Mortgage

Fannie Mae's Economic & Strategic Research Group has launched the Fannie Mae Home Purchase Sentiment Index (HPSI), which condenses the results of its National Housing Survey (NHS) into one, monthly prediction to help industry members make informed decisions.

Fannie Mae says the HPSI reflects more than four years of data and is solely devoted to housing. Specifically, the index is based on the answers to six key NHS questions concerning Americans' evaluations of market conditions and their attitudes related to home purchase decisions.

According to the August 2015 HPSI, the index fell 0.5 points to 80.8, maintaining the decline from the all-time high in June. The HPSI is up 5.3 points since this time last year. Highlights of the index are as follows:

  • The percent of respondents who said it's a good time to buy a house rose to 63%, increasing two percentage points from last month's all-time survey low;
  • Those who said it's a good time to sell rose two percentage points to 47%, while those who said it's a bad time to sell also increased to 44%;
  • Those who said that home prices will increase over the next 12 months fell to 47%, while the percent who said that home prices will decrease rose to 9%;
  • The share who expect mortgage interest rates to increase in the next 12 months rose three percentage points to 54%, while the share who say mortgage rates will decrease remained steady at 5%;
  • The share who say they are not concerned with losing their job rose to 83%, while the share of respondents who say they are concerned with losing their job fell to 16%; and
  • Those who say their household income is significantly higher than it was 12 months ago fell to 24%, while those who say it's significantly lower fell to 12%.

‘Consumer attitudes toward the current home selling climate have slid back to their April 2015 level, contributing to a slight decline in the August HPSI reading relative to its four-year high, reached two months ago,’ says Doug Duncan, senior vice president and chief economist for Fannie Mae.

‘Expectations of rising mortgage rates and increasing concerns in the last six months about the direction of the economy seem to be weighing on consumers' assessment of the housing market,’ he says. ‘Those who think it's a good time to buy or sell a home have consistently pointed to favorable mortgage rates as the primary reason for their optimism. Those who think it's a bad time to buy or sell a home have consistently pointed to unfavorable economic conditions as the primary reason for their pessimism. Still, the four-year upward trend in the HPSI indicates that consumers remain fairly optimistic about the housing market.’

Fannie's Economic & Strategic Research Group plans to release the HPSI at 8:30 a.m., Eastern Time, on the seventh day of each month or the first business day afterward.

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