Uptick in Home Purchase Sentiment Reflects Increased Confidence

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Fannie Mae’s Home Purchase Sentiment
Index (HPSI) for November rose slightly, but within the 0.5-point increase was
some increased confidence about personal finances and the wisdom of buying a
home.  The index, which consolidates responses
from a subset of questions on the company’s National Housing Survey, rose to
86.2 from 85.7 in November. The index is 1.6 points lower than in December
2017.

 

 

A survey high record was set in the
net share of Americans who reported their income was up significantly over the
last 12 months.  A 5-point increase
brought the net share to 24 percent.

Fifty-seven percent of respondents told
pollsters it was a good time to buy a home while 34 percent disagreed.  This resulted in net positive responses of 23
percent, up two points from October.

The other component of the HPSI that
increased, by 1 point, were expectations that mortgage rates would go
down.
  That component, long in negative
territory, rose to a net of -56 percent.

Those positives were largely offset
by expectations that home prices would no longer continue to go up.  Net positive responses declined for the
second straight month, down 4 points to 33 percent. The net share of
respondents who were not worried about losing their job was down 1 point but
was still at 77 percent.  The component
representing those who think it is a good time to sell a home was unchanged at
35 percent.

“The HPSI has moved within a tight
range over the past five months, as positive sentiment regarding the overall
economy continued to offset cooling housing sentiment,” said Doug Duncan,
senior vice president and chief economist at Fannie Mae. “Consumers’
perceptions of growth in their household income reached a survey high this
month, helping to absorb some of the impact of increasing mortgage rates on
housing market activity. Meanwhile, the net share of consumers expecting home
prices to increase over the next 12 months continues to moderate, dropping by
13 percentage points since this time last year.”

While not components of the HPSI,
survey respondents are also asked about their expectations for the degree of
increases or decreases in both home purchase and rental prices.
  Among the 60 percent who said they do expect
rents to go up, the average amount of the anticipated increase rose from 4.3
percent to 4.4 percent.  The 46 percent
who still expect home prices to continue higher also lowered their expectations
from a 2.6 percent annual increase to 2.5 percent.

The Home Purchase Sentiment Index
(HPSI) distills information about consumers’ home purchase sentiment from
Fannie Mae’s National Housing Survey® (NHS) 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 HPSI is constructed from
answers to six NHS questions that solicit consumers’ evaluations of housing
market conditions and address topics that are related to their home purchase
decisions. The questions ask consumers whether they think that it is a good or
bad time to buy or to sell a house, what direction they expect home prices and
mortgage interest rates to move, how concerned they are about losing their
jobs, and whether their incomes are higher than they were a year earlier.

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 November 2018 National Housing Survey was
conducted between November 1 and November 2, 2018, but primarily during the
initial two weeks of that period.



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