HPSI Decreases to 80.8 from 83.2
Economy Continues to Drag Housing Upward Despite Lackluster Consumer Financial Sentiment
WASHINGTON, DC – Fannie Mae’s Home Purchase Sentiment Index™ (HPSI) decreased 2.4 points to 80.8 in November, with more Americans reporting lower income prospects. The challenge of housing affordability coupled with tight supply may be preventing overall housing sentiment from gaining momentum as income growth isn’t keeping pace with the cost of housing. Consumers’ net attitudes about the direction of their household income relative to a year ago fell 5 points during the month, setting this HPSI component back to just below its March 2015 level. The HPSI Good Time to Sell component fell 6 points on net this month while Good Time to Buy was the only component to improve, increasing 1 point on net.
“The latest reading of the Home Purchase Sentiment Index remains near the survey’s high witnessed in June, exemplifying the theme we laid out at the beginning of the year: the economy drags housing upward,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “While aggregate income growth has gradually picked up with a continually improving labor market, consumers’ assessment of their income over the past year has not yet shown sustained improvement, partially weighing on overall sentiment. This year’s housing market is poised to be the best since 2007; however, consumers’ ability and willingness to purchase a home is likely to remain an issue in many regions going forward until we see consumer confidence in their income growth consistently gain traction.”
HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS
Fannie Mae’s November 2015 Home Purchase Sentiment Index (HPSI) decreased 2.4 percentage points to 80.8 in November. Most notably, the HPSI Household Income and Good Time to Sell and components decreased 5 and 6 points on net, respectively, while Good Time to Buy rose 1 point on net. Concern about job loss remains minimal, with the percentage of respondents who are unconcerned about losing their job remaining relatively flat in November at 84 percent. Overall, the HPSI is down 0.2 points since this time last year.
- The net share of respondents who say that it is a good time to buy a house rose 1 percentage point to 35%.
- The net percentage of respondents who say it is a good time to sell a house fell for the second month in a row – dropping 6 percentage points to 4% in November.
- The net share of respondents who say that home prices will go up remained constant at 38%.
- The net share of those who say mortgage interest rates will go down fell 2 percentage points to negative 48%.
- The net share of respondents who say they are not concerned with losing their job fell 2 percentage points to 69%, falling for the first time since July.
- The net share of respondents who say their household income is significantly higher than it was 12 months ago fell 5 percentage points to 6%.
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.
The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey 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). To reflect the growing share of households with a cell phone but no landline, the National Housing Survey has increased its cell phone dialing rate to 60 percent 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.
DETAILED HPSI & NHS FINDINGS
For detailed findings from the November 2015 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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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 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.
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