Consumer Confidence in Housing Dips as Homebuying Sentiment Falls Sharply in July
WASHINGTON, DC -
The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) decreased 2.3 points in July to 74.2, moderating slightly after two consecutive months of advances. Three of the six HPSI components decreased month over month, with consumers reporting a significantly more pessimistic view of homebuying conditions but a more optimistic view of home selling conditions. Year over year, the HPSI is down 19.5 points.
“Following a partial recovery of the HPSI in the previous two months, consumer sentiment toward housing took a slight step back in July amid a rise in coronavirus infections across many parts of the country, including the south and southwest,” said Doug Duncan, Senior Vice President and Chief Economist. “Supply constraints appear to be applying upward pressure to consumers’ home price expectations, which in turn has contributed to both a sharp reversal in optimism about whether it is a good time to buy a home and further improvement in home-selling sentiment. The July survey was conducted as legislators considered the extension of several provisions in the CARES Act to support household incomes during the pandemic. Not surprisingly – more than any other respondent groups – renters, 18-to-34-year olds, and households earning less than $100,000 think it’s a bad time to buy a home, which we believe suggests a less favorable outlook for first-time homebuying activity. In the months ahead, we continue to expect consumer sentiment to be closely linked to the country’s progress in containing the spread of the virus.”
Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in July by 2.3 points to 74.2. The HPSI is down 19.5 points compared to the same time last year. Read the full research report for additional information.
- Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 61% to 53%, while the percentage who say it is a bad time to buy increased from 27% to 38%. As a result, the net share of Americans who say it is a good time to buy decreased 19 percentage points.
- Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 41% to 45%, while the percentage who say it’s a bad time to sell remained unchanged at 48%. As a result, the net share of those who say it is a good time to sell increased 4 percentage points.
- Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased this month from 34% to 35%, while the percentage who said home prices will go down decreased from 25% to 23%. The share who think home prices will stay the same increased from 31% to 34%. As a result, the net share of Americans who say home prices will go up increased 3 percentage points.
- Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased this month from 17% to 16%, while the percentage who expect mortgage rates to go up increased from 32% to 35%. The share who think mortgage rates will stay the same remained unchanged at 42%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 4 percentage points.
- Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 74% to 76%, while the percentage who say they are concerned decreased from 26% to 23%. As a result, the net share of Americans who say they are not concerned about losing their job increased 5 percentage points.
- Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 25% to 22%, while the percentage who say their household income is significantly lower remained unchanged at 16%. The percentage who say their household income is about the same increased from 58% to 62%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 3 percentage points.
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 respondents 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 support the housing market. The July 2020 National Housing Survey was conducted between July 1, 2020 and July 22, 2020. 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 July 2020 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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About Fannie Mae
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit:
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Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views, including assumptions about the duration and magnitude of shutdowns and social distancing, could produce materially different results. The analyses, opinions, estimates, forecasts and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.