Consumers Show Increased Caution in Home Purchase Sentiment in September

Katie Penote

202-752-2261

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 2.2 points to 82.8 in September, moving further off of survey highs. Consumer caution surfaced in the September HPSI, in which four of the six components decreased during the month. The largest decrease was seen in the net share of consumers who expect mortgage interest rates to go down over the next 12 months, which fell 6 percentage points. This was followed by a 5 percentage point drop in the net share of consumers who say now is a good time to buy a home and a 3 percentage point drop in the net share of consumers reporting confidence about not losing their job over the next year. Household Income was the only HPSI component to increase in September with slightly more consumers than the previous month reporting that their household income is significantly higher than it was 12 months ago.

“The decline in the HPSI over the past two months from the survey-high in July of 86.5 adds a note of caution to our moderately positive housing outlook,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Downside changes came in particular from the HPSI components mortgage rate direction and good time to buy a house. In addition, the starter home tight supply and rising home prices as well as the unsettled political environment are likely giving many consumers a reason to pause or question their home purchase sentiment.”

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae’s September 2016 Home Purchase Sentiment Index (HPSI) decreased 2.2 percentage points in September to 82.8. Overall, the HPSI is down 1.0 point since this time last year.

• Breaking from the increasing trend of the last few months, the net share of Americans who say it is a good time to buy a house fell by 5 percentage points to 29% to match a previous all-time low reached in May.  
• The net percentage of those who say it is a good time to sell a house remained at 15% in September.
• The net share of Americans who say that home prices will go up fell 1 percentage point from last month to 34%.
• The net share of those who say mortgage rates will go down over the next twelve months fell 6 percentage points to negative 44%.
• The net share of Americans who say they are not concerned with losing their job fell 3 percentage points to 70%.
• The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 2 percentage points to 12%.

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 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 60 percent of respondents via their cell phones (as of October 2014). 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 September 2016 National Housing Survey was conducted between September 6, 2016 and September 26, 2016. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS

For detailed findings from the September 2016 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 Consumer Attitude Measures page on fanniemae.com. Also available on the site are in-depth topic analyses, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

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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 fanniemae.com and follow us on twitter.com/fanniemae.