Consumer Sentiment at Highest Levels in Years

The latest Fannie Mae Home Purchase Sentiment Index® (HPSI) shows an increase of 3.5 points in January to 70.7, its highest level since March 2022. Overall, the full index is up 9.1 points year over year.

The index and its assessment are based on the following components:

  • Do respondents think now is a good time to buy and/or sell?
  • Expectations of home prices and mortgage rates and how they’ll change.
  • Are respondents concerned about job loss?
  • What is the current state of household income?

As for the latest index:

  • 17% of respondents say now is a good time to buy a home, 83% say it’s a bad time. This was unchanged month over month.
  • 60% of respondents said now is a good time to sell (up from 57%), while 40% say now is a bad time (down from 42%).
  • 37% of respondents believe that home prices will go up in the next 12 months.
  • 36% of respondents believe that mortgage rates will come down in the next 12 months.
  • 82% of respondents are not concerned about experiencing job loss in the next 12 months.
  • Only 17% of respondents said their household income has significantly increased in the last 12 months – 13% said it has significantly decreased. 

Expert take:

“Mortgage rate optimism increased markedly again in January, with a survey-high percentage of consumers anticipating mortgage rate declines over the next year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “For the first time in our National Housing Survey’s history, a greater share of consumers believe mortgage rates will decrease over the next year, rather than increase. Consumers also expressed greater confidence in their job situations this month, another sign that housing sentiment may continue to improve in 2024.”

Duncan continued: “However, while home affordability may improve if actual mortgage rates continue moving downward, other parts of the affordability equation have yet to ease or improve for consumers. A large majority still think home prices will either increase or stay the same; the ‘good time to buy’ component continues to hover near its historical low; and fewer than one-in-five respondents indicated that their household income was significantly higher year over year, matching a survey low. All in all, while a lower mortgage rate path supports our forecast for a gradual increase in housing demand and sales activity in 2024, until we see a meaningful increase in housing supply, we expect affordability will remain a significant barrier to homeownership for many households.”

For the full report, click here  

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