NATNews Blog > January 2016 > HPSI Closes Year on Positive Note Driven by Reported Income Growth

    HPSI Closes Year on Positive Note Driven by Reported Income Growth

    1/7/2016 1:46:27 PM
    By Katie Penote
     
    Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased 2.4 points to 83.2 in December, capping off its strongest year thus far, as Americans’ household income prospects bounced back to levels of three months ago. The share of consumers who reported that their income was significantly higher than it was 12 months ago climbed 9 percentage points on net in December, while those who were unconcerned about losing their job rose 3 percentage points on net.
     
    Coupled with an improved financial outlook, more consumers said they believe now is a good time to sell a home – climbing 4 percentage points on net – although the share who believe now is a good time to buy remained flat in December.
     
    “Consumers ended the year on an improved note with regard to their income, job security, and overall economic outlook. This more positive consumer sentiment brought the HPSI up a few points, moving the index up for all of 2015,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Brightening economic prospects, if sustained, should stimulate demand for homeownership. However, continuing upward pressure on rental prices and constrained housing supply, particularly for starter homes, may mean prospective first-time homebuyers could face affordability constraints.”
     
    Home Purchase Sentiment Index – Component Highlights
    Fannie Mae’s December 2015 Home Purchase Sentiment Index (HPSI) rose 2.4 percentage points in December to 83.2. Overall, consumer sentiment about personal finances and the direction of the economy has improved since last month. Four of the six HPSI components increased in December: Household Income, Good Time to Sell, Job Security, and Home Prices. Mortgage Rate net expectations fell by 4 points, while the net share of respondents who said it is a Good Time to Buy remained at 35 percent. Overall, the HPSI is up 1.9 points since this time last year.
    • The net share of respondents who say that it is a good time to buy a house remained flat at 35%.
    • The net percentage of respondents who say it is a good time to sell a house rose after falling for two months in a row – rising 4 percentage points to 8% in December.
    • The net share of respondents who say that home prices will go up rose 2 percentage points to 40%.
    • The net share of those who say mortgage interest rates will go down continued to decrease, dropping 4 percentage points to negative 52%.
    The net share of respondents who say they are not concerned with losing their job rose 3 percentage points to 72%. 85% of respondents say they are not concerned about losing their job, tying an all-time survey high.
    The net share of respondents who say their household income is significantly higher than it was 12 months ago rose 9 percentage points to 15%.
     
    About Fannie Mae’s Home Purchase Sentiment Index
    The HPSI 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 questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.
     
    About Fannie Mae’s National Housing Survey
    The most detailed consumer attitudinal survey of its kind, Fannie Mae’s NHS polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010).
     
    The December 2015 National Housing Survey was conducted between Dec.1 and Dec. 21, 2015. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.
     
    Detailed HPSI & NHS Findings
     
    For detailed findings from the December 2015 HPSI and NHS, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Consumer Attitude Measures page on fanniemae.com. Also available on the site are in-depth topic analyses, which provide a detailed assessment of combined data results from three monthly studies of NHS results.