Fannie Mae found a year-over-year jump in confidence is driven by increased optimism that mortgage rates will fall, improving homebuying and selling conditions.
WASHINGTON — Consumers are growing more optimistic about the housing market, anticipate improvements to their financial situation in the next year and expect mortgage rates to fall, the Fannie Mae Home Purchase Sentiment Index (HPSI) found.
The HPSI, a consumer housing market confidence gauge, increased 0.4 points in November to 75.0, continuing its sharp upward trend over the past year as consumers appear to be acclimating to the higher mortgage rate and home price environment.
This month, a new record-high share of consumers indicated that they expect mortgage rates to decline over the next 12 months, while fewer respondents said they expect home prices to rise. While only 23% believe it’s a “good time to buy a home,” on net that component continued its upward trend, and is now notably higher than last November’s share of 14%. The share of respondents saying it’s a “good time to sell” remained flat month over month but is also up from last year. Year over year, the HPSI is up 10.7 points.
“Over the past year, we have seen a significant improvement in general consumer sentiment toward the housing market, largely driven by increased optimism that mortgage rates will fall and improved perceptions of both homebuying and home-selling conditions,” said Mark Palim, Fannie Mae senior vice president and chief economist. “Notably, this improvement in sentiment continues a trend that began about two and a half years ago following the sizable run-up in home prices during the pandemic, and it is likely due in part to consumers’ slow-but-steady acclimation to current market conditions. Of course, high home prices and high mortgage rates remain the primary reasons why the vast majority of consumers think it’s a ‘bad time to buy’ trends that we expect to continue into the new year.”
Palim continued: “Fortunately, a sharply growing share of consumers say they expect their personal financial situation to improve over the next year. Additionally, more consumers expect home price growth to slow, a belief recently shared by our expert panelists, as well, which may help ease some of the affordability burden and incentivize some households, especially those who have been waiting in the wings, to finally act on their home purchase decision.”
Home Purchase Sentiment Index component highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased 0.4 points in November to 75.0. The HPSI is up 10.7 points compared to the same time last year.
Good/bad time to buy: The percentage of respondents who say it is a good time to buy a home increased from 20% to 23%, while the percentage who say it is a bad time to buy decreased from 80% to 77%. As a result, the net share of those who say it is a good time to buy increased 6 percentage points month over month to negative 54%.
Good/bad time to sell: The percentage of respondents who say it is a good time to sell a home remained unchanged at 64%, while the percentage who say it’s a bad time to sell also remained unchanged at 35%. As a result, the net share of those who say it is a good time to sell remained unchanged month over month at 29%.
Home price expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 39% to 38%, while the percentage who say home prices will go down increased from 23% to 25%. The share who think home prices will stay the same decreased from 38% to 36%. As a result, the net share of those who say home prices will go up in the next 12 months decreased 5 percentage points month over month to 12%.
Mortgage rate expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 39% to 45%, while the percentage who expect mortgage rates to go up increased from 22% to 25%. The share who think mortgage rates will stay the same decreased from 38% to 29%. As a result, the net share of those who say mortgage rates will go down over the next 12 months increased 4 percentage points month over month to 20%.
Job loss concern: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months decreased from 79% to 78%, while the percentage who say they are concerned remained unchanged at 20%. As a result, the net share of those who say they are not concerned about losing their job remained unchanged month over month at 58%.
Household income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 18% to 16%, while the percentage who say their household income is significantly lower increased from 11% to 12%. The percentage who say their household income is about the same increased from 70% to 71%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 1 percentage point month over month to 5%.
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 or lower 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 a representative sample of adult household financial decision makers in 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 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).
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 November 2024 National Housing Survey was conducted between November 1, 2024, and November 19, 2024. Most of the data collection occurred during the first two weeks of this period. The latest NHS was fielded exclusively through AmeriSpeak, NORC at the University of Chicago’s probability-based panel, in coordination with Fannie Mae and PSB Insights. 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.
Source: Fannie Mae
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