Fannie Mae says its Home Purchase Sentiment Index
(HPSI) which, before a slight setback in July, had been rebounding strongly
from its April COVID-19 related plunge, got back on track last month. The August
index, based on responses to six questions in the National Housing Survey (NHS),
increased 3.3 points to a 77.5 reading.
Five of the six components rose from their July level
with consumers reporting a more
optimistic view of both homebuying and home-selling conditions, but a slightly
more pessimistic view of expected home price growth. The Index remains down 16.3
“The HPSI rose modestly in August,
recovering the ground it lost in July,” said Doug Duncan, Senior Vice President
and Chief Economist. “The HPSI’s recovery was driven by near-record low
mortgage rates that helped restore much of consumers’ positivity on whether it
is a good time to buy a home, while also improving the good-time-to-sell
sentiment. The August survey was conducted as consumers continue to face
uncertainty regarding schools’ and businesses’ reopening plans and as the CARES
Act $600-per-week income supplement expired.”
The percentage of survey respondents
who say it is a good time to buy a home increased from 53 percent to 59 percent,
while the percentage who say it is a bad time to buy decreased from 38 percent
to 35 percent. As a result, the net share of Americans who say it is a good
time to buy increased 9 percentage points to 24 percent.
There was similar improvement in the
percentage of respondents who say it is a good time to sell a home. That sentiment
increased from 45 to 48 percent, while those who said it was a bad time fell
from 48 percent to 44 percent. This resulted in a net increase in those who say
it is a good time to sell of 7 percentage points to 4.0 percent. The net is
down 36 points compared to a year earlier.
A few more respondents predicted further
declines in mortgage interest rates than did in July. The share of those who
expect rates to go down over the next 12 months rose one point to 17 percent while
those who think rates will increase dipped to 33 percent from 35 percent. The
net is now a negative 16 percent, about the same as one year ago.
Despite an unemployment rate in
double digits when the survey was conducted, there remains little concern on
the part of respondents about job security. Seventy-eight percent said they
were not concerned about losing their jobs, up 2 points from July, while 22
percent said they are concerned, a 1-point decline. The net unconcerned was up
3 points to 56 percent.
Respondents who say their household
income is significantly higher than it was 12 months ago increased from 22
percent to 25 percent, while those who said it was significantly lower remained
at 16 percent and those who said their income was unchanged dipped to 59
percent from 62 percent. As a result, the net share of those who say their
household income is significantly higher than it was 12 months ago increased 3
The sole component to decline was
home price expectations. The percentage of respondents who expect prices to
increase in the next 12 months declined from 35 percent to 33 percent, while 23
percent expect them to go down, a 3-point gain. The share who think home prices
will stay the same was unchanged at 34 percent. As a result, the net share of
Americans who say home prices will go up decreased 5 percentage points.
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.