Home purchase sentiment has hit a new high as mortgage rates have dropped, according to new data from Fannie Mae.
Fannie Mae’s Home Purchase Sentiment Index (HPSI) inched up 0.1 points in August to 93.8, a survey high. The increase was driven by an 11-percentage-point spike in the share of consumers who believe mortgage interest rates will fall further. The other five of the HPSI’s six components, however, remained flat or decreased month over month.
“Growing expectations that mortgage rates will remain flat or decline are reflected in the HPSI’s latest reading, which is now at a survey high even though other indicators of economic and housing sentiment are flat to negative,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Unfortunately, much of the lower interest-rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy. We do expect the housing market to remain relatively stable, and the favorable rate environment should continue to support increased refinance activity.”
Highlights of the survey include:
- The share of Americans who say it is a good time to buy a home dropped one percentage point to 25% month over month. Year over year, the component is up four percentage points
- The net share of those who say it’s a good time to sell a home dropped four percentage points in August. Year over year, the component is up two percentage points
- The share of those who say home prices will increase over the next 12 months rose one percentage point in August to 36%. The component is two percentage points lower than last year at the same time
- The net share of Americans who think mortgage rates will go down over the next 12 months spiked by 11 percentage points to -17%. That’s up 35 percentage points from the same time last year
- The share who say they are not concerned about losing their job in the next 12 months fell four percentage points to 77% in August. That’s down three points from the same period last year.
- The share who say their household income is significantly higher than it was 12 months ago held steady in August at 21%. The component was down one percentage point year over year