Optimism Over Selling Sends Housing Index to Record High
Five out of the six components of Fannie Mae's Home Purchase Sentiment Index (HPSI) gained ground in April, driving the index to a new all-time high. However, the sixth component showed consumers considerably less invested in it being a good time to buy a home.
The HPSI rose 3.4 points to 91.7 in April, up 5 percentage points since April 2017. The responses broke through the previous high of 89.5, reached in both December 2017 and January 2018. The milestone came despite a decrease of 3 percent in the net share of respondents who said now is a good time to buy a home. The net of 29 for that question was still way above the record low net of 18 from the survey last August.
The net share reporting that now is a good time to sell a home increased 6 percentage points to 45 percent. This was a new survey high for that component, which rose 19 percentage points over the 12 months ended in April.
"The latest HPSI reading edged up to a new survey high, showing that consumer attitudes remain resilient going into the spring/summer home buying season," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "High home prices and good economic conditions helped push the share of Americans who think it's a good time to sell to a fresh record high. However, the upward trend in the good-time-to-sell share seen since last spring has done little to release more for-sale inventory. The tightest supply in decades, combined with rising mortgage rates from historically low levels, will likely remain a hurdle for mobility and a persistent headwind for home sales."
The Home Purchase Sentiment Index (HPSI) converts information about consumers' home purchase sentiment from six questions asked each month by 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 net share of respondents who said home prices will go up in the next 12 months increased 7 percentage points in April to 49 percent. Among those who expect further price increases the average amount projected was 3.9 percent, up from 3.0 percent in March.
While not an index component, 61 percent of consumers expect rents to increase. The percentage increase expected was 5.7 percent, the largest forecast since at least the beginning of 2016.
Consumers who expect mortgage rates to decline in the next 12 months remain a distinct minority. While the net positive responses increased by 4 points, they are still at -48 percent.
Americans expressed an increased sense of job security, with the net share who say they are not concerned about losing their job increasing 5 percentage points to 76 percent this month. Finally, the net share reporting that their income is significantly higher than it was 12 months ago increased 1 percentage point but is still only 18 percent.
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 April survey was conducted between the first and the 26th of the month.