Housing Sentiment Again Shows Signs of Plateauing
HPSI Flat in April as Consumers Continue to Adjust to Higher Rate Environment
The Fannie Mae Home Purchase Sentiment Index® (HPSI) was unchanged in April at 71.9 and is showing signs of once again plateauing as consumers continue to adjust to the higher interest rate and home price environment. This month, 67% of consumers indicated that it’s a good time to sell a home, while 20% said it’s a good time to buy a home. These two indicators are up 10 percentage points and 3 percentage points, respectively, since the end of 2023, despite mortgage rates having moved steadily upward. Additionally, the share of respondents who expect mortgage rates to go down over the next 12 months fell to 26%. The full index is up 5.1 points year over year.
“The HPSI, unchanged this month, may have hit another plateau as consumers maintain their ‘wait and see’ approach to the housing market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Overall, housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would move lower. However, recent data showing stickier-than-expected inflation, rising mortgage rates, and continued home price appreciation appear to have given consumers pause regarding the market’s direction. While only 20% of consumers think it’s a good time to buy a home, 67% think it’s a good time to sell one, a share that’s moved steadily upward since the start of the year. We think consumers’ generally improved sense of home-selling conditions bodes well for listings and housing activity, particularly for the segment of the population who may need to move for lifestyle reasons and have already begun adjusting their financial expectations to the current mortgage rate and price environment. However, for potential homebuyers in less of a rush to transact, ongoing affordability challenges may continue to keep many of them on the sidelines – one reason why we expect home sales to tick up only gradually over the course of the year.”
Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) remained unchanged in April at 71.9. The HPSI is up 5.1 points compared to the same time last year. Read the full research report for additional information.
- Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 21% to 20%, while the percentage who say it is a bad time to buy remained unchanged at 79%. As a result, the net share of those who say it is a good time to buy decreased 1 percentage point month over month.
- Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 66% to 67%, while the percentage who say it’s a bad time to sell decreased from 34% to 32%. As a result, the net share of those who say it is a good time to sell increased 3 percentage points month over month.
- Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 40% to 42%, while the percentage who say home prices will go down decreased from 20% to 18%. The share who think home prices will stay the same increased from 38% to 39%. As a result, the net share of those who say home prices will go up in the next 12 months increased 3 percentage points over month.
- Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 29% to 26%, while the percentage who expect mortgage rates to go up decreased from 34% to 33%. The share who think mortgage rates will stay the same increased from 36% to 40%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 1 percentage point month over month.
- Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 77% to 76%, while the percentage who say they are concerned remained unchanged at 23%. As a result, the net share of those who say they are not concerned about losing their job decreased 2 percentage points month over month.
- Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 19% to 17%, while the percentage who say their household income is significantly lower remained unchanged at 12%. The percentage who say their household income is about the same increased from 68% to 70%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 2 percentage points month over month.
SOURCE Fannie Mae
