Inventory and affordability squeeze aside, consumer sentiment about the housing market rose in April going into the home buying season, according to the latest Fannie Mae Home Purchase Sentiment Index (HPSI) on Monday. The HPSI rose 3.4 points in April to 91.7 marking a new all-time high, Fannie Mae said.
Out of the six components that make up the survey, only one—the number of respondents who said that now is a good time to buy a home—decreased, falling three percentage points to 29 percent, compared with March. On the other hand, the net share of respondents who said that now was a good time to sell a home increased 6 percentage points on a month-over-month basis, to 45 percent, reaching a new survey high, the report said.
Homebuyer sentiment was likely affected by the lack of for-sale inventory as well as rising home prices, that are likely to remain a challenge for home sales for the rest of the year too, according to Doug Duncan, SVP and Chief Economist at Fannie Mae.
“High home prices and good economic conditions helped push the share of Americans who think it's a good time to sell to a fresh record high,” said Duncan. “However, the upward trend in the good-time-to-sell share seen since last spring has done little to release more for-sale inventory. The tightest supply in decades, combined with rising mortgage rates from historically low levels, will likely remain a hurdle for mobility and a persistent headwind for home sales.”
According to the HPSI, the net share of respondents who said that home prices would go up in the next 12 months increased 7 percentage points to 49 percent in April, while the net share of consumers who said mortgage rates would fall over the next 12 months increased 4 percentage points during the month to 48 percent.
The factors that spurred these positive sentiments among consumers included an increased sense of job security and a higher share of Americans reporting that their income was significantly higher than it was 12 months ago.
“The latest HPSI reading edged up to a new survey high, showing that consumer attitudes remain resilient going into the spring/summer home buying season,” Duncan said.