Index Says Americans Want to Sell, But Not Buy

Wednesday, Fannie Mae released its Purchase Sentiment Index (HPSI), an index constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. Fannie Mae puts this into a single number reflecting consumers’ current views and forward-looking expectations of housing market conditions and complementing existing data sources to inform housing-related analysts and decision making. The index ultimately reports on whether consumers think it is a good or bad time to buy or sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs and whether their incomes are higher than they were a year earlier.

The slight 0.5 percentage point decrease to 86.2 in HSPI can be attributed to decreases in three of the six HSPI components being larger on net than the three increases. The net share of Americans who reported that now is a good time to buy a home dropped 8 percentage points, reaching a record low. However, those who reported now is a good time to sell a home reached record highs, increasing 6 percentage points. This is the second time in the survey’s history that the net share of those saying it’s a good time to sell surpassed the net share of those saying it’s a good time to buy.

Americans who believe home process will go up decreased by 5 percentage points, landing at 40 percent for the month of May, while those that believe mortgage rates will go down over the next 12 months rose 5 percentage points to -52 percent, which follows last months trend.

More Americans are feeling secure about their job according to HPSI numbers. The net share of Americans who say they are not concerned with loosing their job fell six percentage points to 71 percent, back near the level seen two months ago in March. Eighteen percent of Americans said their household income is significantly higher than it was 12 months ago.

“High home prices have led many consumers to give us the first clear indication we’ve seen in the National Housing Survey’s seven-year history that they think it’s now a seller’s market,” said Doug Duncan, SVP and Chief Economist at Fannie Mae. “However, we continue to see a lack of housing supply as many potential sellers are unwilling or unable to put their homes on the market, perhaps due in part to concerns over finding an affordable replacement home. Prospective homebuyers are likely to face continued home price increases as long as housing supply remains tight.”

For detailed findings from the May 2017 Home Purchase Sentiment Index, click here.