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Homeowners are enjoying a summer of good vibes, according to the latest Fannie Mae Home Purchase Sentiment Index (HPSI), which increased 3.3 points to reach a new record high of 86.5 in July.
Within the different HPSI components, the net share of consumers expecting an increase in home prices over the next 12 months rose eight percent while the net share of consumers expecting mortgage interest rates to go down over the next 12 months increased by five percent. The share of consumers who said they would buy if they were going to move increased to 67 percent and the share of consumers who said they would rent moved declined to 26 percent, equaling the all-time low for this monthly survey.
“The HPSI reached a new survey high in July, but enthusiasm should be tempered because the increase only returns the index to a very gradual upward trend,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers. Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.”