you think the stock market has been volatile, you might consider a dose of Dramamine
before checking out Fannie Mae’s Home Purchase Sentiment Index (HPSI). The results of the March National Housing
Survey (NHS) as reflected in the HPSI rose 2.5 points to 88.3, wiping out much
of the 3.7-point decline posted in February.
Those February results had, to the penny, reversed the increase in the
index from December to January. Despite
the recent spate of ups and downs, the
HPSI is 3.8 points higher than the March level in 2017.
The HPSI’s internal numbers were even crazier. Three
of the six components that go into the HPSI number increased while the two that
were unchanged were those dealing with personal finances rather than the
The increase in the index was driven by a sharp
increase in the share of respondents who said now is a good time to buy a home.
The “good time” responses rose 5
percentage points to 62, leaving a net of 31 percent who gave positive
responses, a 10-point swing compared to February.
Positive attitudes toward selling a
home also rose. The net share of those who said it is a good time to sell rose
3 percentage points to 39 percent, matching the survey high last seen in June
The net share of those who think
house prices will continue to rise was down 3 percentage points from February
and has dropped 10 points since January. That net now stands at 42 percent.
One of the least volatile components
of the HPSI over the last two years has been the one predicting the direction
of mortgage rates. The percentage expecting rates to go down has never risen
over 5 percent, resulting in a strong negative net share – i.e. a large
majority thinking rates will go up. In
March fewer people said they expected further rate increases, pushing the net
share of those who expect rates to decline to increase 5 points to -52 percent.
Americans expressed no change in
their sense of job security, with the net share who say they are not concerned
about losing their job staying flat month over month at 71 percent. Finally, the net share reporting that their
income is significantly higher than it was 12 months ago was also unchanged at
“The HPSI’s recent run of volatility
continued in March, as it recovered last month’s loss and remained within the
five-point range of the past twelve months,” said Doug Duncan, senior vice
president and chief economist at Fannie Mae. “The primary driver of this
month’s increase was the sizable rise in the net share of consumers who think
it’s a good time to buy a home, which returned the indicator to its year-ago
level. On the whole, a slight majority of consumers continue to express
optimism regarding the overall direction of the economy.”
The Home Purchase Sentiment Index
(HPSI) converts information about consumers’ home purchase sentiment from six NHS
questions 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.
The NHS 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 March survey
was conducted between the first and the 25th of the month.