Five of the six components that make up Fannie Mae’s
Home Purchase Sentiment Index (HPSI) rose in January, pushing the index to an
all-time high. HPSI, a quantification of some of the data collected through
Fannie’s National Housing Survey, was 89.5, up 3.7 points from the December
reading. The index is also 6.8 percentage
points higher than in January 2017.
The only survey question for which the net positive responses
did not improve in January was whether household income had grown significantly
over the previous 12 months. That score was unchanged at 16 percent.
A conviction that home prices will continue to rise
was the main driver of the overall index. The net of responses predicting further
gains was up 8 points from December to 52 percent. This is 10 points above the
net a year ago. Fifty-eight percent of
respondents answered yes to the question, a survey high.
Sentiment about whether it is a good time to buy a
home or to sell one both rose during the month. The net change in positive good-to-buy
responses was up 3 percentage points to 27 percent, reversing much of January’s
5-point decline. The net positive responses regarding selling grew by 5 points
to 38 percent, 23 points higher than in January 2017. The percentage of those
answering that it was a good time to sell hit a survey high of 65 percent.
Americans also expressed a greater sense of job security; the net share who
say they are not concerned about losing their job increased 5 percentage
points. Finally, net responses from consumers about whether mortgage rates will
decline down over the next 12 months increased 2 percentage points although
that net still remains underwater by 50 points.
“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, senior vice president 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
The NHS, from which the HPSI is
constructed, is conducted monthly by telephone among 1,000 consumers, both
homeowners and renters. Respondents are
asked more than 100 questions to track attitudinal shifts. The Home Purchase Sentiment Index (HPSI)
distills information about consumers’ home purchase sentiment from six of those
questions into a single number. The January 2018 National Housing Survey was
conducted between January 2 and January 25, 2018.