Housing Sentiment Remains ‘Volatile,’ Edges Back Up

The Fannie Mae Home Purchase Sentiment Index rose by 2.5 points in March to 88.3, reversing last month’s decrease, but indicated continued volatility as the spring buying season continues.

Fannie Mae attributed the rise to increases in three of the six Index components. The net share of respondents who said now is a good time to buy a home increased 10 percentage points compared to February. Additionally, the net share who reported that now is a good time to sell a home increased 3 percentage points. The net share who said home prices will go up in the next 12 months decreased 3 percentage points in March, while the net share of consumers who said mortgage rates will go down over the next 12 months also increased 5 percentage points. Americans expressed no change in their sense of job security, with the net share who say they are not concerned about losing their job staying flat month over month. The net share reporting that their income is significantly higher than it was 12 months ago was also unchanged.

“The HPSI’s recent run of volatility continued in March, as it recovered last month’s loss and remained within the five-point range of the past 12 months,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The primary driver of this month’s increase was the sizable rise in the net share of consumers who think it’s a good time to buy a home, which returned the indicator to its year-ago level. On the whole, a slight majority of consumers continue to express optimism regarding the overall direction of the economy.”