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Fannie Mae: Housing Market Sentiment 'Subdued'

Feb 07, 2023
Fannie Mae HPSI January 2023

Home Purchase Sentiment Index rose in January for 3rd straight month, but remains below pre-pandemic level.

KEY TAKEAWAYS
  • The percentage of respondents who said it’s a good time to buy a home decreased from 21% to 17%.
  • The percentage of respondents who said it’s a good time to sell a home increased from 51% to 59%.

“Subdued.”

That’s how Fannie Mae’s chief economist describes consumer sentiment toward the housing market, as recorded in the enterprise’s latest Home Purchase Sentiment Index (HPSI), released Tuesday.

While the index increased in January for the third-consecutive month, it remained well below its pre-pandemic high. Overall, the HPSI rose 0.6 points to 61.6, with three of the index’s six components — home-selling conditions, home price outlook, and household income — increasing month over month, Fannie Mae said. Year over year, the full index is still down 10.2 points.

Only 17% of survey respondents said they believe it’s a good time to buy a home, most likely because of the ongoing affordability challenges posed by higher mortgage rates and home prices. 

“January’s HPSI results showed that consumer sentiment toward the housing market remains subdued by historical standards,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “For consumers, the same affordability issues are persisting, as they continue to indicate that high home prices and high mortgage rates make it a ‘bad time to buy’ a home.”

Duncan said the latest survey data also indicates that the majority of consumers expect home prices to decrease or remain flat over the next year, which could be an incentive for some potential homebuyers to delay their purchase decision. 

“Although ‘good time to sell’ sentiment ticked upward this month, it’s still much lower than it was a year ago, as purchase affordability remains seriously constrained and mortgage demand has receded,” he said. “Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months.”

HPSI Highlights

  • Good/Bad Time to Buy: The percentage of respondents who said it’s a good time to buy a home decreased from 21% to 17%, while the percentage who said it’s a bad time to buy increased from 76% to 82%. The net share of those who say it’s a good time to buy decreased 9 percentage points month over month.
  • Good/Bad Time to Sell: The percentage of respondents who said it’s a good time to sell a home increased from 51% to 59%, while the percentage who said it’s a bad time to sell decreased from 42% to 39%. The net share of those who say it’s a good time to sell increased 11 percentage points month over month.
  • Home Price Expectations: The percentage of respondents who said home prices will go up in the next 12 months increased from 30% to 32%, while the percentage who say home prices will go down remained unchanged at 37%. The share who think home prices will stay the same increased from 29% to 30%. The net share of those who said home prices will go up increased 2 percentage points month over month.
  • Mortgage Rate Expectations: The percentage of respondents who said mortgage rates will go down in the next 12 months decreased from 14% to 13%, while the percentage who expect rates to rise increased from 51% to 52%. The share who think mortgage rates will stay the same increased from 31% to 33%. The net share of those who said mortgage rates will go down over the next 12 months decreased 2 percentage points month over month.
  • Job Loss Concern: The percentage of respondents who said they are not concerned about losing their job in the next 12 months remained unchanged at 82%, while the percentage who said they are concerned increased from 17% to 18%. The net share of those who said they are not concerned about losing their job remained unchanged (due to rounding) month over month.
  • Household Income: The percentage of respondents who said their household income is significantly higher than it was 12 months ago decreased from 25% to 22%, while the percentage who said their household income is significantly lower decreased from 15% to 10%. The percentage who said their household income is about the same increased from 59% to 67%. The net share of those who said their household income is significantly higher than it was 12 months ago increased 2 percentage points month over month.

Survey Methodology

The Home Purchase Sentiment Index 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 National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of 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, with the findings compared to the same survey conducted monthly beginning June 2010. 

The January 2023 NHS was conducted between Jan. 3-20, 2023. Most of the data collection occurred during the first two weeks of that period. In January 2023, the NHS was conducted exclusively through AmeriSpeak, NORC at the University of Chicago’s probability based panel, on behalf of PSB Insights and in coordination with Fannie Mae.

About the author
David Krechevsky was an editor at NMP.
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