Fannie Mae: Consumer Confidence in Housing Near Record High Despite Slight Dip

The Fannie Mae Home Purchase Sentiment Index dipped slightly in February, decreasing 0.5 points to 92.5, but remained near its survey high of 93.8.

Three of the six Index components decreased month over month, including the percentage of Americans who believe that now is a good time to buy a home. Year over year, the Index is up 8.2 points, reflecting in part consumers’ more favorable mortgage rate expectations, despite that index component moderating this month.

“The HPSI remained relatively steady in February, reflecting another month of robust consumer sentiment consistent with strong housing market data to start the year,” said Doug Duncan, Senior Vice President and Chief Economist. “In particular, household income sentiment picked back up as more workers saw their wages rise amid tight labor market conditions, helping bolster already strong housing demand.”

Duncan cautioned, however, though American consumers’ optimism about the direction of the economy is higher this month than at any point in the survey’s nearly 10-year history, the late February stock market decline, precipitated in part by evolving expectations of the potential economic impact of the coronavirus, is not fully reflected in this month’s results due to the timing of our survey data collection, which ended February 22. “We may see some volatility in sentiment in the months ahead as these circumstances play out,” he said.

Key report findings:

–Good/Bad Time to Buy: The percentage of Americans who say it is a good time to buy remained the same this month at 59%, while the percentage who say it is a bad time to buy increased from 30% to 32%. As a result, the net share of Americans who say it is a good time to buy decreased 2 percentage points.

–Good/Bad Time to Sell: The percentage of Americans who say it is a good time to sell increased from 66% to 67%, while the percentage who say it’s a bad time to sell increased from 21% to 22%. As a result, the net share of those who say it is a good time to sell stayed the same.

–Home Price Expectations: The percentage of Americans who say home prices will go up in the next 12 months decreased this month from 48% to 47%, while the percentage who said home prices will go down increased from 7% to 8%. The share who think home prices will stay the same remained unchanged at 38%. As a result, the net share of Americans who say home prices will go up decreased 2 percentage points.

–Mortgage Rate Expectations: The percentage of Americans who say mortgage rates will go down in the next 12 months increased this month from 7% to 8%, while the percentage who expect mortgage rates to go up increased from 33% to 38%. The share who think mortgage rates will stay the same decreased from 48% to 46%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months decreased 4 percentage points.

–Job Concerns: The percentage of Americans who say they are not concerned about losing their job in the next 12 months decreased from 86% to 85%, while the percentage who say they are concerned decreased from 14% to 13%. As a result, the net share of Americans who say they are not concerned about losing their job remained unchanged.

–Household Income: The percentage of Americans who say their household income is significantly higher than it was 12 months ago increased from 27% to 32%, while the percentage who say their household income is significantly lower remained the same at 11%. The percentage who say their household income is about the same decreased from 61% to 56%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 5 percentage points.