Fannie Mae Reports Housing Confidence Falls, Sales Market Remains Volatile

Real Estate In-Depth | March 2018

WASHINGTON—Fannie Mae in its Home Purchase Sentiment Index released on March 7 points to falling key market metrics.

The Fannie Mae Home Purchase Sentiment Index fell 3.7 points in February to 85.8, reversing the previous month’s increase. The HPSI is down 2.5 percentage points compared with the same time last year.

The decline can be attributed to decreases in five of the six HPSI components. The net share of respondents who said now is a good time to buy a home decreased five percentage points compared to January. Additionally, the net share that reported that now is a good time to sell a home decreased two percentage points. The net share who said home prices will go up in the next 12 months decreased seven percentage points in February, while the net share of consumers who said mortgage rates will go down over the next 12 months also decreased seven percentage points.

Americans expressed a weakened sense of job security, with the net share that say they are not concerned about losing their job decreasing two percentage points. Finally, the net share reporting that their income is significantly higher than it was 12 months ago increased one percentage point.

“Volatility in consumer housing sentiment continued into February, with the new tax law beginning to impact respondents’ take-home pay and the stock market creating negative headlines due to early-month turbulence,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Additionally, consumers’ expectations for higher mortgage rates suggest that consumers expect the Fed to hike rates a few more times in 2018. We will continue to track how consumer housing attitudes trend in the coming months as these various market forces play out.”

Home Purchase Sentiment Index Component Highlights

  • The net share of Americans who say it is a good time to buy a home decreased five percentage points to 22%.
  • The net share of those who say it is a good time to sell fell two percentage points to 36%.
  • The net share of Americans who say home prices will go up decreased seven percentage points to 45% in February.
  • The net share of those who say mortgage rates will go down over the next 12 months fell seven percentage points to -57%.
  • The net share of Americans who say they are not concerned about losing their job fell two percentage points to 71%.
  • The net share of those who say their household income is significantly higher than it was 12 months ago rose one percentage point to 17%.
  • The share who say their household income is significantly lower than it was 12 months ago fell two percentage points to 9%, matching a survey low last seen in February 2017.