Consumer confidence in housing hits all-time high

March 15, 2017 | By

The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased by 5.6 percentage points in February to 88.3, a new all-time high. Five of the six components that comprise the HPSI were up, and three hit record highs.

The net share of Americans who reported that now is a good time to buy rose 11 percentage points, while the net share who believe that now is a good time to sell rose 7 percentage points. Consumers also demonstrated greater confidence about not losing their jobs, with the net share rising 9 percentage points.

On net, the share of respondents reporting that their household income is significantly higher than it was 12 months ago increased 4 percentage points. Additionally, more Americans expect home prices to go up, with the net share rising 3 percentage points. The net share of those who think mortgage rates will go down over the next 12 months remained unchanged for the third consecutive month.

Read more: New monthly index is all about housing

“The latest post-election surge in optimism puts the HPSI at its highest level since its starting point in 2011. Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time homebuyers,” says Doug Duncan, senior vice president and chief economist at Fannie Mae.

“Preliminary research results from our team find that Millennials are accelerating the rate at which they move out of their parents’ homes and form new households. However, continued slow supply growth implies continued strong price appreciation and affordability constraints facing Millennials and first-time buyers in many markets,” he adds.

Home Purchase Sentiment Index – Component Highlights

Fannie Mae’s 2017 HPSI increased in February by 5.6 percentage points to 88.3. The HPSI is also up 5.6 percentage points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a house rose 11 percentage points to 40 percent, rebounding strongly from last month’s survey low.
  • The net percentage of those who say it is a good time to sell increased by 7 percentage points to 22 percent, reaching a new survey high.
  • The net share of Americans who say that home prices will go up increased by 3 percentage points in February to 45 percent.
  • The net share of those who say mortgage rates will go down over the next 12 months remained constant for the third consecutive month at -55 percent.
  • The net share of Americans who say they are not concerned about losing their job rose 9 percentage points to a new survey high of 78 percent.
  • The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 4 percentage points to 19 percent in February, continuing the increase from January and reaching a new survey high.

Estimates, forecasts, and other views expressed in this article should not be construed as indicating Fannie Mae’s expected results, are based on a number of assumptions, and may change without notice. How this information affects Fannie Mae will depend on many factors. Neither Fannie Mae nor its Economic & Strategic Research (ESR) Group guarantees that the information in this article is accurate, current, or suitable for any particular purpose. Changes in the assumptions or underlying information could produce materially different results. The ESR Group’s views expressed in this article speak only as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

 

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