Consumers expressed more positive
sentiments toward the housing market as 2021 arrived, sending Fannie
Mae’s Home Purchase Sentiment Index (HPSI) a bit higher. The most significant
gains came from increased optimism about the climate for selling a home.

The index increased by 3.7 points to
77.7 in January, erasing at least a portion of its 6-point loss in December. Fifty-seven
percent of consumers contacted by the monthly National Housing Survey said they
felt it was a good time to sell a home, up 7 points from December, while those
who viewed it as a bad time dropped 9 points to 33 percent. This left the net
positive answers at 24 percent, a 16-point month-over-month increase and 21
points higher than in January of last year.

 

 

Positive feelings about buying a
home were unchanged from December at 52 percent, but negative responses dipped
from 39 to 37 percent, moving the net positives up 2 points to 15 percent. This,
however, is 14 points below the level in January 2020.

“The HPSI experienced a modest
uptick in January, reversing much of December’s decline,” said Doug Duncan,
Fannie Mae Senior Vice President and Chief Economist. “Interestingly,
lower-income and renter groups were more optimistic this past month across
nearly all of the sentiment index’s components. We will pay close attention to
see if this newfound optimism develops into a trend, which could indicate
either that some demographics who have been more negatively impacted by the
pandemic may be starting to feel the economic recovery or that this is a
response to the additional stimulus enacted in December.”

“Overall, the index’s monthly increase was driven largely by a substantial jump
in the share of consumers reporting that it’s a good time to sell a home, with
many citing favorable mortgage rates, high home prices, and low housing
inventory as their primary rationale. Among owners and higher income groups,
however, the other five components of the index remained relatively flat or
slightly negative, suggesting to us that some consumers are waiting to gauge
the effectiveness of any new fiscal policies and vaccination distribution
programs on both housing and the larger economy.”

The percentage of respondents who say home prices will go up in the next 12
months was unchanged at 41 percent while those who expect a price decline grew
from 16 percent to 17 percent. Thirty-four percent expect no change in prices,
identical to the result in December. Thus, the net share of Americans who say
home prices will go up decreased 1 percentage point month-over-month and is 17
percent below year-ago levels.

The percentage of respondents who expect
mortgage rates will decline over the next 12 months moved 1 point higher to 9
percent while 45 percent say rates will increase, 2 points more than the prior
month. Those who expect no change declined from 39 to 37 percent. This left the
net at a negative 36 percent compared to a negative 26 percent the previous January.

The percentage of respondents who
say they are not concerned about losing their job in the next 12 months
remained unchanged at 75 percent and the net who said they were not concerned
increased 1 point to 51 percent. That is down 21 points year-over-year.

The share of respondents reporting
significantly higher household income over the past year increased from 20 to
21 percent while reports of significant declines were down 4 points to 14
percent. Little change was reported by two-thirds of respondents. The net share
of those who say their household income is significantly higher than it was 12
months ago increased 5 percentage points month-over-month but was down 9 points
on an annual basis.

The National Housing Survey from
which the HPSI is constructed, is conducted monthly by telephone among 1,000
consumers, both homeowners and renters. In addition to the six questions that
are the framework of the index, respondents are asked questions about the economy,
personal finances, attitudes about getting a mortgage, and questions to track
attitudinal shifts.

By Jann Swanson , dated 2021-02-09 08:48:17

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Courtesy of Mortgage News Daily

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