August’s Fannie Mae Home Purchase Sentiment Index (HPSI) is up +1.5 points to a total of 88.0 points. This is the first time the HPSI has increased since May of this year.
Doug Duncan, Fannie Mae’s chief economist and senior vice president, said, “Consumers are attuned to the divergence between a slowing housing market and a strong macro economy.” Both job security and a perception of income growth are the two survey highs for HPSI results in August.
More than 80% of survey respondents indicated they were not concerned about losing their jobs, an increase of +15% when compared to July 2018. )Not worrying about losing your job is a big deal!) This +15% increase more than compensated for July’s decrease of -11%.
Some 22% of respondents indicated that their income was “significantly higher” in August, an increase of +1% compared with July. “Significantly higher” was not defined.
Only 21% of respondents indicated that “now was a good time to buy a house.” This is an increase of 3% compared to July when 18% said it was a good time to buy.
Some 38% of respondents indicated that now was a good time to sell a house, again 3% more than last month.
Less than 40% of respondents, 38% in August and 39% in July indicated that home prices would rise during the next 12 months. And emphatically, -51% of respondents indicated that mortgage rates would go down over the next 12 months.
The Fannie Mae Home Purchase Sentiment Index (HPSI) derives from its National Housing Survey (NHS), the most detailed consumer attitudinal survey about home owning and home renting. The broader NHS contacts +1,000 consumers by cell phone and asks them to respond to 100 questions regarding the housing market, home and rental price changes, household finances, the overall economy, homeownership distress, etc.
The HPSI gleans 6 of those 100 questions to determine how consumers feel about buying/selling a home, their job and income stability, sales and rental price changes, etc.
Though consumer confidence was at an all time high in August, Duncan said, “After years of robust price growth outpacing income growth, consumers face significant housing affordability challenges at the low end of the market.” And, as we know, consumer demand is highest at the low end of the market.