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Fannie’s Index Shows More Americans Believe It’s a Bad Time to Buy a Home

The Fannie Mae Home Purchase Sentiment Index decreased in December, falling 2.7 points to 83.5, resuming its recent downward trend after November’s slight uptick.

The decrease can be attributed primarily to a 12-percentage point decrease in the net share of Americans who said it is a good time to buy a home. The net share of Americans who said it is a good time to sell a home increased 1 percentage point.

Respondents reporting significantly higher income over the past 12 months fell 5 percentage points on net, erasing last month’s gains, while the net share expressing greater job confidence increased 2 percentage points. Finally, the net share of respondents who expect home prices to go up fell 2 percentage points, and the net share who expect mortgage rates to go down remained unchanged.

“Consumer attitudes regarding whether it’s a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Although home price growth slowed in 2018, the cumulative impact of sustained, robust increases in home prices outpacing income growth likely helped drive the share of consumers citing high home prices as a primary reason for a bad time to buy a home to a survey high.

HOME PURCHASE SENTIMENT INDEX COMPONENT HIGHLIGHTS

Fannie Mae’s 2018 Home Purchase Sentiment Index decreased in December by 2.7 points to 83.5. The HPSI is down 2.3 points compared with the same time last year. Additional highlights from the survey are as follows:

  • The net share of Americans who say it is a good time to buy a home fell 12 percentage points from last month to 11%. This component is down 13 percentage points from the same time last year.
  • The net share of those who say it is a good time to sell a home rose 1 percentage point to 36%. This component is up 2 percentage points from the same time last year.
  • The net share of those who say home prices will go up fell 2 percentage points to 31%, declining for the third consecutive month. This component is down 13 percentage points from the same time last year.
  • The net share of Americans who say mortgage rates will go down over the next 12 months remained unchanged at -56%. This component is down 4 percentage points from the same time last year.
  • The net share of Americans who say they are not concerned about losing their job increased 2 percentage points to 79%. This component is up 11 percentage points from the same time last year.
  • The net share of those who say their household income is significantly higher than it was 12 months ago fell 5 percentage points to 19%. This component is up 3 percentage points from the same time last year.

“Meanwhile, consumers’ views on the direction of the economy, a key support for housing market sentiment of late, has softened somewhat from its October high,” said Duncan. “Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability.” The Home Purchase Sentiment Index distills information about consumers’ home purchase sentiment from Fannie’s National Housing Survey into a single number.

 

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