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Attitudes toward homebuying are on the rise—as are expectations that prices will jump—according to the Fannie Mae Home Purchase Sentiment Index (HPSI) released this morning.
According to the HPSI, which is released monthly by Fannie Mae, the overall purchasing sentiment among Americans rose 2 percentage points last month and 1.2 percentage points over-the-year. It is currently at 82.7—the Index’s highest point in five months.
This indicates a surge of optimism in the housing and financial markets that hasn’t been seen in years, according to Doug Duncan, SVP and Chief Economist at Fannie Mae.
“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” Duncan said.
Of the six individual components that factor into the HPSI, four were up in January: the number of citizens who believe home prices will rise in the next year jumped 7 percent; the number reporting a significantly higher income in the last 12 months rose by 5 percent; the number who believe it is a good time to sell a home rose by 2 percent; and the new number who have confidence in keeping their employment rose 1 percent.
The only factors to decrease or remain stagnant were the net share of consumers who believe it’s a good time to buy a home, which is down 3 percent, and the share who believe mortgage rates will do down, which saw no change.
Though the current HPSI results indicate growing confidence in the housing market, Duncan said it will all depend on income gains, as well as home prices and mortgage rates as the year goes on.
“Any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability,” Duncan said. “If consumers’ anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more.”
To see the full HPSI findings, visit FannieMae.com.
