Key Highlights
- Fannie Mae’s monthly Home Purchase Sentiment Index (HPSI) picks up steam for both buyers and sellers
- HPSI increases to 81.7 in October
- Concerns about employment stability and income status grew in October
Both buyers and sellers became increasingly optimistic about participating in October’s housing market, according to Fannie Mae’s monthly Home Purchase Sentiment Index (HPSI).
Though a bit of apprehensiveness about rising home prices lingered from September, 60% of prospective homebuyers had a more optimistic view, some +6% more optimistic than the previous month, according to the HPSI, about now being a good time to purchase a home in October. 59% of sellers, amid a strong seller’s market, indicated in October’s HPSI that now was a good time to seller, an increase of three percentage points from September’s HSPI.
The HPSI is still down -7.1 points compared to last year though the index has registered steady and continuous recovery strength since it collapsed to its lowest reading since November 2011 in April 2020.
Freddie Mac indicated last week that mortgage rates hit the “lowest ever” rates recorded in Freddie’s monthly rate report over its almost 50 year history. The Federal Reserve’s Federal Open Market Committee has consistently indicated that it expects rates to stay near zero through 2023.
Despite home prices rising +6.7% y/y in September, CoreLogic reiterated its estimate that home prices would increase only +0.2% by next year at this time.
Another data point to pay attention to is the unemployment rate. In October, that rate fell to 6.9%, the first time the unemployment rate fell to half of April’s devastatingly record high at 14.7% in April 2020. While that fallen unemployment rate is great news, some 11.1M people remain out of work.
All in all, the housing market continues to be a high point amid the overall economy. Doug Duncan, senior vice president and chief economist with Fannie Mae, said, “The continuing evolution of the pandemic and the 2020 election outcomes may have longer lasting and unexpected impacts on consumer sentiment, as we saw following the 2016 elections, and we expect both factors will shape the housing market over the coming months.”
Thanks to HousingWire.
Also read: Buyer Demand Driving UK Home Price Growth to 5-Year High, Home Price Insights for September 2020, October Homebuilder Sentiment Hits Another Record High While Housing Starts Surged +22.6% in July
