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Housing Confidence Down as More Americans Believe It’s a Bad Time to Buy a Home

January 07, 2019 / Source: Fannie Mae

January 07, 2019

Housing Confidence Down as More Americans Believe It's a Bad Time to Buy a Home

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased in December, falling 2.7 points to 83.5, resuming its recent downward trend after November's slight uptick. The decrease can be attributed primarily to a 12-percentage point decrease in the net share of Americans who said it is a good time to buy a home. The net share of Americans who said it is a good time to sell a home increased 1 percentage point. Respondents reporting significantly higher income over the past twelve months fell 5 percentage points on net, erasing last month’s gains, while the net share expressing greater job confidence increased 2 percentage points. Finally, the net share of respondents who expect home prices to go up fell 2 percentage points, and the net share who expect mortgage rates to go down remained unchanged.

“Consumer attitudes regarding whether it's a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Although home price growth slowed in 2018, the cumulative impact of sustained, robust increases in home prices outpacing income growth likely helped drive the share of consumers citing high home prices as a primary reason for a bad time to buy a home to a survey high. Meanwhile, consumers' views on the direction of the economy, a key support for housing market sentiment of late, has softened somewhat from its October high. Looking ahead, consumers expect the pace of home price growth to slow over the course of 2019, which may temper growing concern over housing affordability.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae's 2018 Home Purchase Sentiment Index (HPSI) decreased in December by 2.7 points to 83.5. The HPSI is down 2.3 points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a home fell 12 percentage points from last month to 11%. This component is down 13 percentage points from the same time last year.
  • The net share of those who say it is a good time to sell a home rose 1 percentage point to 36%. This component is up 2 percentage points from the same time last year.
  • The net share of those who say home prices will go up fell 2 percentage points to 31%, declining for the third consecutive month. This component is down 13 percentage points from the same time last year.
  • The net share of Americans who say mortgage rates will go down over the next 12 months remained unchanged at -56%. This component is down 4 percentage points from the same time last year.
  • The net share of Americans who say they are not concerned about losing their job increased 2 percentage points to 79%. This component is up 11 percentage points from the same time last year.
  • The net share of those who say their household income is significantly higher than it was 12 months ago fell 5 percentage points to 19%. This component is up 3 percentage points from the same time last year.

ABOUT FANNIE MAE'S HOME PURCHASE SENTIMENT INDEX

The Home Purchase Sentiment Index (HPSI) distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey® (NHS) into a single number. The HPSI reflects consumers' current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is 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. The questions ask consumers whether they think that it is a good or bad time to buy or to 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.

ABOUT FANNIE MAE'S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 70 percent of respondents via their cell phones (as of January 2018). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The December 2018 National Housing Survey was conducted between December 1, 2018 and December 21, 2018. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by PSB, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS 

For detailed findings from the December 2018 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

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