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Press Release

Unusual Housing Market Dynamics Contributing to Stall in Consumer Sentiment

September 7, 2023
HPSI’s Low-Level Plateau Continues as Consumers Remain Frustrated by Lack of Affordability

WASHINGTON, DC – The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) remained effectively unchanged in August, as consumer confidence toward housing continued along the low-level plateau set earlier this year. Three of the HPSI’s six components increased month over month, most notably the component measuring perceived home-selling conditions. In August, 66% of consumers reported that it’s a good time to sell a home, compared to only 18% who said it was a good time to buy a home. Additionally, despite the significant rise in rates over the last couple years, only 18% expect mortgage rates to go down in the next 12 months. Overall, the full index is up 4.9 points year over year.

“Mortgage rates once again breached the 7-percent mark in August, hitting a 22-year high and doing no favors for consumer sentiment,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Consumers remain pessimistic toward the housing market in general and homebuying conditions in particular. The overall HPSI is maintaining the low-level plateau set a few months back, and we don’t see much upside to the index in the near future, barring significant improvements to home affordability, which we also don’t expect. While renters are slightly more pessimistic than homeowners, for two years now a large majority of both groups have told us that it’s a bad time to buy a home, and they’ve continuously cited affordability concerns as the primary reason. If mortgage rates remain elevated, many existing homeowners will likely continue to hold on to their current historically low mortgage rates, suppressing existing home listings and providing support for home prices – assuming mortgage demand maintains resilience despite the higher rate environment. Considering that existing home sales have traditionally represented approximately 85-90% of total home sales, even substantial quantities of new home production are unlikely to produce the inventory needed to meaningfully improve affordability.”

Duncan continued: “From a historical perspective, the current housing market is unusual, as demonstrated in part by the HPSI and its recent plateauing. Given the significant home price appreciation and rapid rise in mortgage rates, it is very much a tale of two markets, at least from a consumer perspective. Of course, a third perspective exists among homebuilders, who are currently thriving amid the surge in demand for new home construction, a function of the unusual dynamics at play in the existing home space between would-be sellers and would-be buyers, as well as changing labor market dynamics owing to the ongoing prevalence of remote work. In the past, first-time homebuyers typically sought to purchase existing homes, which were generally more affordable than new homes. They then invested sweat equity before moving further up the housing ladder, often in response to an expanding family or another significant life event. However, Baby Boomers’ desire to age in place and the impact of the ‘lock-in effect,’ in which existing homeowners are disincentivized from listing their homes for sale because their existing mortgage rate is well below current market rates, across demographic groups – but particularly among Gen Xers – has thrown a wrench into this historical cycle, making it more difficult for would-be homebuyers to find affordable existing home purchase options. This is driving demand toward newly constructed homes, which, again, has been great news for homebuilders and the larger economy, at least to this point.”

Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased in August by 0.1 points to 66.9. The HPSI is up 4.9 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 remained unchanged at 18%, while the percentage who say it is a bad time to buy remained unchanged at 82%. As a result, the net share of those who say it is a good time to buy remained unchanged month over month.
  • Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 64% to 66%, while the percentage who say it’s a bad time to sell decreased from 36% to 34%. As a result, the net share of those who say it is a good time to sell increased 5 percentage points month over month.
  • Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged at 41%, while the percentage who say home prices will go down increased from 24% to 26%. The share who think home prices will stay the same decreased from 34% to 33%. As a result, the net share of those who say home prices will go up in the next 12 months decreased 2 percentage points month over month.
  • Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 16% to 18%, while the percentage who expect mortgage rates to go up increased from 45% to 46%. The share who think mortgage rates will stay the same decreased from 38% to 34%. As a result, the net share of those who say mortgage rates will go down over the next 12 months increased 1 percentage point month over month.
  • Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 80% to 78%, while the percentage who say they are concerned increased from 20% to 22%. As a result, the net share of those who say they are not concerned about losing their job decreased 5 percentage points month over month.
  • Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 19% to 22%, while the percentage who say their household income is significantly lower increased from 10% to 12%. The percentage who say their household income is about the same decreased from 71% to 65%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 1 percentage point month over month.

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 National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed attitudinal longitudinal surveys of its kind, 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). 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 August 2023 National Housing Survey was conducted between August 1, 2023 and August 20, 2023. Most of the data collection occurred during the first two weeks of this period.  The latest NHS was conducted exclusively through AmeriSpeak®, NORC at the University of Chicago’s probability-based panel, on behalf of PSB Insights and in coordination with Fannie Mae. Calculations are made using unrounded and weighted respondent level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.

Detailed HPSI & NHS Findings
For detailed findings from the 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.

To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.

About the ESR Group
Fannie Mae’s Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. 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.