In spite of that modest monthly uptick, the full index is down 10.2 points from a year ago.
January’s HPSI results showed that consumer sentiment toward the housing market remains subdued by historical standards. For consumers, the same affordability issues are persisting, as they continue to indicate that high home prices and high mortgage rates make it a ‘bad time to buy’ a home. The latest survey data also indicated that the majority of consumers expect home prices to decrease or remain flat over the next year, which may incentivize some potential homebuyers to delay their purchase decision. Although ‘good time to sell’ sentiment ticked upward this month, it’s still much lower than it was a year ago, as purchase affordability remains seriously constrained and mortgage demand has receded. Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months.
Doug Duncan
Fannie Mae Senior Vice President and Chief Economist.
THE HOME PURCHASE SENTIMENT INDEX (HPSI): COMPONENT HIGHLIGHTS
For a fuller picture of January’s profile of consumer sentiment, Fannie Mae provides the following breakdown of each of the six components and how they changed month to month.
1. Good/Bad Time to Buy—The share of survey respondents saying now is a good time to buy a home dropped in January from 21% to 17%, while the share of those saying it’s a bad time to buy went up from 76% to 82%. So, the net share of those saying now is a good time to buy dropped 9 percentage points compared to the previous month, tying a low last seen in October 2022.
2. Good/Bad Time to Sell—The share of respondents saying now is a good time to sell a home went up from 51% to 59%, while the share saying it’s a bad time to sell went down from 42% to 39%. So, the net share of respondents saying now is a good time to sell increased 11 percentage points compared to the previous month.
3. Home Price Expectations—The share of respondents saying home prices will likely go up in the next 12 months went up from 30% to 32%, while the share saying home prices will drop remained unchanged at 37%. The net share of those saying home prices will likely increase went up 2 percentage points compared to the previous month.
4. Mortgage Rate Expectations—The share of respondents sharing mortgage rates will likely go down in the next 12 months dropped from 14% to 13%, while the share expecting mortgage rates to go up increased from 51% to 52%. The share expecting mortgage rates to remain the same went up from 31% to 33%. So, the net share of those expecting mortgage rates to decline over the next 12 months dropped 2 percentage points compared to the previous month.
5. Job Loss Concern...
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