Fannie Mae has released the latest installment of its monthly Home Purchase Sentiment Index (HPSI), with the Index rising 3.7 points in January 2018 to hit an all-time survey high of 89.5. The HPSI is also up 6.8 points year-over-year.
“HPSI rebounded from last month’s dip to a new survey high in January, in large part due to the spike in consumers’ net expectations that home prices will increase over the next year,” said Doug Duncan, SVP and Chief Economist at Fannie Mae. “Results may continue to fluctuate over the coming months as consumers sort out the implications of the newly passed tax legislation on their household finances. Over the past year, continued home price growth has helped spur a sizable increase in the net share of consumers who say it’s a good time to sell a home but also a modest weakening in the net share who say it is a good time to buy. At the start of 2018, it is still too early to determine the overall effect of the new tax legislation on housing, and we will need to see whether positive impacts on both housing demand and supply materialize in the coming months.”
The Home Purchase Sentiment Index (HPSI) culls data from Fannie Mae’s National Housing Survey (NHS), compiling a single score that “reflects consumers’ current views and forward-looking expectations of housing market conditions.” The survey 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.”
Breaking the HPSI results down further, the net share of Americans who said it was a good time to purchase a house rose to 27 percent, a 3 percent increase that overcome a dropoff in sentiment from the month prior. The net share of respondents who said they believed it was a good time to sell their home also rose, up 4 percent to 38 percent.
Looking further down the road, the net share of respondents who believe that home prices will rise jumped up 8 percentage points to 52 percent in January, hitting a new survey high. The net percentage who said mortgage rates will decrease within the next 12 months rose 2 percentage points, but that still left it at -50 percent.
As far as general economic concerns, fewer Americans expressed concerns about losing their jobs—the net share who said they were not concerned about the prospect rose by 5 percentage points to 73 percent. Finally, the net share of respondents who said their household income had significantly increased over the past 12 months remained flat at 16 percent month-over-month.