Consumers in October reported a more optimistic view of both buying and selling homes, while also reporting a less positive outlook on personal finances and employment, based on Fannie Mae's Home Purchase Sentiment Index (HPSI) [1]
Experts such as Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae said, "to date, the HPSI has recovered over 60% of its COVID-19 pandemic loss, reflecting the bright spot that the mortgage market has been in the economy."
However, he continued, "the evolution of the pandemic and the 2020 election outcomes may have longer-lasting and unexpected impacts on consumer sentiment, as we saw following the 2016 elections, and we expect both factors will shape the housing market over the coming months.”
The HPSI inched up .7 points in October, marking the third-consecutive month-to-month increase. Three of the six HPSI components increased in October. Since last year, the HPSI is down 7.1 points.
While the full research report [2] is available, Fannie Mae highlighted the following components:
- Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home increased from 54% to 60%, 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 month over month.
- Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 56% to 59%, while the percentage who say it’s a bad time to sell decreased from 38% to 35%. As a result, the net share of those who say it is a good time to sell increased 6 percentage points month over month.
- Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased this month from 41% to 40%, while the percentage who say home prices will go down increased from 17% to 20%. The share who think home prices will stay the same decreased from 34% to 31%. As a result, the net share of Americans who say home prices will go up decreased 4 percentage points month over month.
- Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months remained unchanged at 11%, while the percentage who expect mortgage rates to go up decreased from 38% to 32%. The share who think mortgage rates will stay the same increased from 44% to 49%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 6 percentage points month over month.
- Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 83% to 79%, while the percentage who say they are concerned increased from 16% to 21%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 9 percentage points month over month.
- Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 24% to 23%, while the percentage who say their household income is significantly lower increased from 17% to 20%. The percentage who say their household income is about the same decreased from 59% to 55%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 4 percentage points month over month.