On Monday, Fannie Mae’s [1] Home Purchase Sentiment Index (HPSI), which highlights consumers’ current views and forward-looking expectations of housing market conditions, was released. The index revealed an increase in September by 0.3 points to 88.3—up 5.5 points compared to last year.
According to the enterprise, this rise in homebuying optimism can be attributed to increases in the index’s “good time to buy” component, which rose the most month-over-month, with the net share increasing 10 percentage points compared to August. In addition, the net share who reported that now is a “good time to sell” a home rose 2 percentage points in September and is now up 23 percentage points compared to last year.
Fannie Mae’s index also notes that the net share of respondents that said home prices will go up in the next 12 months fell 8 percentage points. However, respondents continued to cite “high home prices as the most important reason behind the bad time to buy and good time to sell indicators.”
Americans also revealed an increased sense of job security as the net share responded, “they are not concerned about losing their job” increased by 1 percent. Additionally, the net share of consumers who reported that their income is higher than it was 12 months ago fell by 1 percentage point.
According to SVP and Chief Economist at Fannie Mae, Doug Duncan, the biggest driver for the increase in the HPSI is the rebound in the good time to buy sentiment, which outweighed the largest drag—a sizable reduction in the net share of consumers expecting home prices to rise over the next year.
“Details in the survey showed a meaningful pickup in the good time to buy component, especially from the renter respondents,” Duncan said. “Additionally, perceptions of easing inventory helped boost the net share saying that now is a good time to buy, which is consistent with less bullish home price appreciation sentiment during the month.”
Duncan explained that overall, Fannie Mae believes that the devastating impacts of the hurricanes will likely weigh on home sales in coming months, posing downside risks for its forecast, which already calls for only a modest gain in home sales this year.
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