The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) increased 4.5 points in May to 67.5, building slightly after nearing its all-time survey low in April. Four of the six HPSI components increased month over month, with consumers reporting a somewhat more optimistic view of homebuying conditions and, to a lesser extent, home-selling conditions. Moreover, fewer consumers reported expectations that mortgage rates will go up over the next 12 months. Year over year, the HPSI is down 24.5 points.
“Although the HPSI’s precipitous declines of March and April did not continue in May, Americans’ financial, economic, and housing market concerns remain substantially elevated compared to survey history,” said Doug Duncan, Senior Vice President and Chief Economist. “Low mortgage rates have helped cushion some of the impact of the pandemic on consumer sentiment regarding whether it’s a good time to buy a home, which picked back up this month to late-2018 levels. Although weakened income perceptions and continuing job loss concerns, particularly among renters, are likely weighing on many would-be buyers, purchase mortgage applications have returned to mid-March levels when pandemic response measures began ramping up. Home-selling sentiment remains severely dampened due primarily to economic concerns, though increased purchase activity may improve the confidence of some potential sellers. As lockdown restrictions begin to ease across the country, we expect economic recovery to be largely shaped by consumers’ decisions regarding when and how to reengage in the economy. We believe this month’s HPSI results and Friday’s unexpectedly favorable labor market report to be encouraging signs for the months ahead.”
Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased in May by 4.5 points to 67.5. The HPSI is down 24.5 points compared to the same time last year. Read the full research report for additional information.
- Good/Bad Time to Buy: The percentage of Americans who say it is a good time to buy a home increased from 48% to 52%, while the percentage who say it is a bad time to buy decreased from 46% to 39%. As a result, the net share of Americans who say it is a good time to buy increased 11 percentage points.
- Good/Bad Time to Sell: The percentage of Americans who say it is a good time to sell a home increased from 29% to 32%, while the percentage who say it’s a bad time to sell decreased from 65% to 62%. As a result, the net share of those who say it is a good time to sell increased 6 percentage points.
- Home Price Expectations: The percentage of Americans who say home prices will go up in the next 12 months increased this month from 23% to 26%, while the percentage who said home prices will go down increased from 34% to 35%. The share who think home prices will stay the same decreased from 36% to 30%. As a result, the net share of Americans who say home prices will go up increased 2 percentage points.
- Mortgage Rate Expectations: The percentage of Americans who say mortgage rates will go down in the next 12 months increased this month from 23% to 25%, while the percentage who expect mortgage rates to go up decreased from 33% to 25%. The share who think mortgage rates will stay the same increased from 35% to 43%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 10 percentage points.
- Job Concerns: The percentage of Americans who say they are not concerned about losing their job in the next 12 months decreased from 76% to 75%, while the percentage who say they are concerned increased from 23% to 24%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 2 percentage points.
- Household Income: The percentage of Americans who say their household income is significantly higher than it was 12 months ago decreased from 20% to 18%, while the percentage who say their household income is significantly lower decreased from 21% to 19%. The percentage who say their household income is about the same increased from 58% to 61%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago remained unchanged.
About Fannie Mae’s Home Purchase Sentiment Index
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.
About Fannie Mae’s National Housing Survey
The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 70 percent of respondents via their cell phones (as of January 2018). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The May 2020 National Housing Survey was conducted between May 1, 2020 and May 19, 2020. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by PSB, in coordination with Fannie Mae.
Detailed HPSI & NHS Findings
For detailed findings from the May 2020 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.