NATNews Blog > November 2015 > Housing Sentiment Remains Flat While Wages Struggle

    Housing Sentiment Remains Flat While Wages Struggle

    11/11/2015 9:02:42 AM
    By Katie Penote
     
    Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased slightly to 83.2 in October as consumers’ volatile outlook on both household income improvement and mortgage interest rates kept housing sentiment relatively flat.

    The HPSI Household Income component fell 4 points on net this month and the Good Time to Buy and Good Time to Sell components fell 2 and 6 points, respectively, after picking up in September.
     
    These dips suggest hesitancy by some consumers to make long-term financial commitments such as buying or selling a home. However, consumers appeared to be less worried about job loss, with the net figure nearing the most favorable reading in the five-year history of Fannie Mae’s National Housing Survey (NHS). In addition, the share of consumers who think mortgage interest rates will go down increased by 4 points on net in October.
     
    Home Purchase Sentiment Index October 2015
     
    “The income growth necessary for renewed momentum in housing market sentiment remains elusive, even though consumers’ confidence in their job security continues to strengthen,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Consumers’ net view on whether their household income has improved over the last year is down once again this month. Some consumers may be hesitant or unwilling to commit to buying or selling a home without seeing meaningful improvement in their wages and salaries. Still, the HPSI remains close to its near all-time high level of the past four years and, given the strong October jobs report, suggests that any cooling in near-term activity, if it occurs, should be moderate.”
     
    Home Purchase Sentiment Index – Component Highlights

    Fannie Mae’s October 2015 Home Purchase Sentiment Index (HPSI) decreased 0.6 percentage points to 83.2 in October following a 3-point increase last month to near its peak level. Of the six component questions, net positive responses rose for three components and fell for three components. Most notably, the Good Time to Sell and Household Income components decreased 6 and 4 points on net, respectively, while Mortgage Rate net expectations increased 4 points. Overall, the HPSI is up 0.7 points since this time last year.
    • The net share of respondents who say that it is a good time to buy a house fell 2 percentage points to 34 percent after climbing the prior two months.
    • The net percentage of respondents who say it is a good time to sell a house fell 6 percentage points to 10 percent in October, dropping from September’s survey high.
    • The net share of respondents who say that home prices will go up rose 2 percentage points to 38 percent.
    • The net share of those who expect mortgage interest rates to drop rose 4 percentage points to negative 46 percent, stopping the trend of net decreases in the last few months. 
    • The net share of respondents who say they are not concerned with losing their job rose 2 percentage points to 71 percent, and has risen each month since July. The percent of respondents who are not concerned about losing their job reached an all-time high of 85 percent.
    • The net share of respondents who say their household income is significantly higher than it was 12 months ago fell 4 percentage points to 11 percent.
     
    For more information about Fannie Mae’s Home Purchase Sentiment Index, visit www.fanniemae.com.