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National Housing Survey/Home Purchase Sentiment Index (HPSI)

Presidential Election Clouds Views of Consumer Housing Sentiment in November

December 7, 2016

The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased in November for the fourth consecutive month, dipping 0.5 points to 81.2. Four of the six components that comprise the HPSI fell in November amid mixed consumer attitudes on either side of the U.S. presidential election. The share of consumers expecting mortgage rates to go down over the next year and those who believe now is a good time to sell a home both fell six percentage points on net. In addition, the net share of consumers reporting confidence in not losing their job over the next 12 months fell five percentage points. However, the net share who reported significantly higher household income compared with the same period last year climbed 11 percentage points in November, more than reversing the drop seen in October.

“The November Home Purchase Sentiment Index outcome is difficult to interpret as the data collection period occurred across the Presidential election timeline,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The results are fairly evenly split between responses collected before and after the election, and there is evidence of an increase in consumer optimism in the immediate aftermath of the election. However, we caution readers against drawing conclusions about sustainable changes in consumer sentiment so soon after the election. For example, low mortgage rates have been the primary driver of positive attitudes toward the home buying and selling climate throughout the recovery. However, if mortgage rates continue their recent rise, we may see a dampening in home purchase attitudes. There are clear predecessors for rapid market changes that ultimately dissipated, which urges caution in the interpretation of stability in short-term rate changes. Most recently was the very temporary market reaction to the Brexit and, earlier, the 'Taper Tantrum,' and in both instances the rate regime returned to roughly its prior position. The drivers are somewhat different in this instance but nonetheless suggest modesty in drawing near-term conclusions. All that said, we do not see in the November HPSI results a fundamental departure from a flattening of housing activity relative to prior periods. This is consistent with our corporate forecast of a modest growth in the 12 months ahead.”

On this webpage you will find a news release with highlights from the HPSI and NHS results and the latest Data Release highlighting the consumer attitudinal indicators.

November News Release
November 2016 National Housing Survey Data Release (PDF)