A wide disparity exists between homebuyers and homesellers according to September's Home Purchase Sentiment Index (HPSI) with the overall index decreasing by 1.2 points to 74.5 points. Year-over-year the index is down by 6.5 points.
The research by Fannie Mae showed that three components of the index’s six total components decreased month-over-month which now show that only 28% of respondents believe that now is a good time to buy a home, down 4% since August.
“The HPSI declined slightly this month but remains within the general bounds we’ve seen since the end of last year,” said Doug Duncan [1], Fannie Mae Senior Vice President and Chief Economist. “The survey’s story is also largely unchanged: Consumers feel it’s a bad time to buy a home but a good time to sell—and they continue to cite high home prices as the primary reason. Across all consumer segments, renters and younger consumers were slightly more likely to indicate it’s a bad time to buy, perhaps a reflection of their generally lower incomes and their observation that the availability of affordable homes is lacking. We’re also seeing a softening in consumers’ expectations that home prices will continue to increase; however, in our view, other housing market fundamentals remain supportive of further home price appreciation—including low levels of inventory and low interest rates.”
Among the six categories that make up the HPSI, the results are as follows:
- The percentage of respondents who say it is a good time to buy a home decreased from 32% to 28%, while the percentage who say it is a bad time to buy increased from 63% to 66%. As a result, the net share of those who say it is a good time to buy decreased by 7 percentage points month-over-month.
- The percentage of respondents who say it is a good time to sell a home increased from 73% to 74%, while the percentage who say it's a bad time to sell remained steady at 19%. As a result, the net share of those who say it is a good time to sell increased 1 percentage point month-over-month.
- The percentage of respondents who say home prices will go up in the next 12 months decreased from 40% to 37%, while the percentage who say home prices will go down remained steady at 24%. The share who think home prices will stay the same increased from 31% to 33%. As a result, the net share of Americans who say home prices will go up increased 3 percentage points month-over-month.
- Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 8%, while the percentage who expect mortgage rates to go up decreased from 53% to 51%. The share who think mortgage rates will stay the same decreased from 35% to 33%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 4 percentage point month over month.
- The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 82% to 81%, while the percentage who say they are concerned increased from 15% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 3 percentage points month over month.
- The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 26% to 27%, while the percentage who say their household income is significantly lower increased from 12to 13%. The percentage who say their household income is about the same decreased from 59% to 57%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago stayed the same at 14 percentage points.
A full copy of the report [2] can be viewed at FannieMae.com. According to the researchers at Fannie Mae, the HPSI distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey [3] into a single number. The HPSI reflects consumers' current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making.