Fannie Mae: Home Purchase Sentiment Index Hits 18-Month Low

Fannie Mae, Washington, D.C., reported its monthly Home Purchase Sentiment Index reached its lowest level in 18 months during March.

The Index decreased by 2.5 points to 80.2. Four of the six HPSI components fell in March, with the survey showing a more negative consumer outlook on the direction of the economy. The largest drop among the HPSI components was the net share of consumers who think now is a good time to sell a home, which fell by 8 percentage points.

HPSI respondents surveyed in March noted that their confidence about not losing their job decreased 7 percentage points on net and fell from a record survey high in February. In addition, the Household Income component fell 4 percentage points on net with fewer consumers reporting that their income was significantly higher than it was 12 months ago.

“Growing pessimism over the last three months about the direction of the economy seems to be spilling over into home purchase sentiment,” said Fannie Mae Chief Economist Doug Duncan.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the survey points to a “dimming” outlook, but noted the index remains at a “healthy” level.

“Despite the disappointing release, our outlook for housing remains optimistic,” Vitner said. “Positive influences such as low mortgage rates and improving household finances should support home buying in 2016.”

Other report highlights:
–The net share of respondents who say that it is a good time to buy a house fell 2 percentage points to 33% as more Americans say it is a bad time to buy.
–The net percentage of those who say it is a good time to sell a house fell 8 percentage points to negative 1%, as more feel it is a bad time to sell than a good time to sell for the first time in over a year.
–The net share of respondents who say that home prices will go up rose 1 percentage point to 34%, breaking the downward trend from the last few months.
–The net share of those who say mortgage interest rates will go down rose 5 percentage points to negative 45% this month, as fewer consumers say mortgage rates will go down, continuing the trend from February.
–The net share of respondents who say they are not concerned with losing their job fell 7 percentage points to 68%.
–The net share of respondents who say their household income is significantly higher than it was 12 months ago fell 4 percentage points to 11%.

The Mortgage Bankers Association will release its Builder Applications Survey this Thursday, April 14. The MBA Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Using these data, as well as data from other sources, MBA provides an early estimate of new home sales volumes at the national, state and metro level. These data also provide information regarding types of loans used by new home buyers.