Fannie Mae’s Home Purchase Sentiment Index® (HPSI) reported a decrease among consumer’s housing confidence for March. The index decreased by 3.8 percent to this month’s 84.5 percent.
The Index and its components
The Home Purchase Sentiment IndexTM (HPSI) is a composite index designed to track consumers’ housing-related attitudes, intentions, and perceptions, using six questions from the National Housing Survey® (NHS).
The HPSI is composed of the following components:
- Good/Bad Time to Buy and Sell a Home
- Home Price and Mortgage Rate Expectations
- Job Concerns and Household Incomes
The Report
Five out of 6 HPSI components decreased, the largest being in “Good Time To Buy.” The following is a breakdown of the report:
The net share of Americans who say it is a good time to buy a house decreased to 30 percent by 10 percentage points from the previous month. Meanwhile, those who think it is a good time to sell increased to 31 percent by 9 percentage points.
When it comes to home price expectations, about 44 percent of Americans now believe prices will go up, a one percentage point decrease from February’s.
Those who say rates will decrease within the next 12 months also decreased to -60 percent, a 5 percentage difference from last month’s.
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Less Americans are also concerned about losing their jobs. This part of the HPSI component also declined by 8 percentage to 70 percent.
So did the fate of the component that measures the net share of Americans who believe household income increased within the last 12 months. It declined by 8 percentage points to 11 percent in March.
Other indicators
Other housing survey key indicators included in the survey are as follows:
The number of Americans who said they would buy a home when they move decreased to 65 percent by one percentage point. Meanwhile, those who would choose to rent rose to 30 percent by one percentage point as well.
There is also lesser enthusiasm on the belief that getting a mortgage would be easy. The net share for March fell by 2 percentage points to 54 percent. Those who believe it would be a difficult process, on the other hand, rose to 43 percent by 3 percentage points.
Will my financial situation get better? Apparently, less and less Americans believe so. The net share for March decreased by 3 percentage points to 49 percent. Those who believe nothing will change increased by a percentage point to 38 percent, while those who are expecting their finances to be even worse in the future rose to 10 percent by 3 percentage points from the previous month.
Is the American economy on the right track? Apparently, roughly 47 percent of Americans believe so, while there are about 41 percent who think we are treading trouble.
What could have accounted for the decreases?
Senior Vice President and Chief Economist of Fannie Mae Doug Duncan quotes:
“Home purchase sentiment gave back some of the gains accumulated over the prior two months that sent the index to its survey high in February. Strong home price appreciation has turned into a double-edged sword for the housing market as it boosted the net share of consumers saying it’s a good time to sell to a record high, surpassing the plunging good time to buy indicator for the first time in the history of the survey.”
“Home purchase sentiment gave back some of the gains accumulated over the prior two months that sent the index to its survey high in February. Strong home price appreciation has turned into a double-edged sword for the housing market as it boosted the net share of consumers saying it’s a good time to sell to a record high, surpassing the plunging good time to buy indicator for the first time in the history of the survey.”
