HPSI components remain flat despite boost in employment activity
Consumer sentiment on US housing conditions edged down last month despite more Americans growing less concerned about losing their job in the next 12 months.
The Fannie Mae Home Purchase Sentiment Index (HPSI) dropped 1.2 points to 76.5 in February, with four of its six components posting month-over-month declines. Year over year, the HPSI fell 16 points.
“As we expected, the HPSI remained relatively flat in February, but underlying data indicate growing job-related optimism among consumers, especially among lower-income and renter groups,” said Fannie Mae chief economist Doug Duncan.
According to Fannie Mae’s report, the net share of respondents who said it is a good time to purchase a home was down 10% from January to 48% in February. The percentage of those who believed it is a good time to sell also declined 4% to 55% month over month. As for mortgage rates, 8% of Americans anticipate rates going down in the next 12 months – down 3% from the previous month.
Meanwhile, home price expectations increased five percentage points, with 47% of consumers saying that home prices will go up in the next 12 months. The share of consumers who said their household income is significantly higher than it was a year ago decreased by 9% to 17% in February.
Erasing much of the drop in homebuyer sentiment, however, was increased optimism regarding job security, with 82% of respondents reporting a significantly more positive view of the labor market compared to January.
“With the growing likelihood that lockdown restrictions will continue easing as vaccination efforts ramp up, and with warmer weather on the horizon and another round of fiscal stimulus pending, these two segments of consumers may have good reason to feel more positive about the Labor market,” Duncan said. “This optimism appears to be well-placed, too, given Friday’s jobs report from the Bureau of Labor Statistics, which showed the strongest net gain in payroll employment since October, although the unemployment rate remains quite high by historical standards.
“However, other components of the index remain well below pre-pandemic levels, so we believe there may still be room for improvement in housing and economic attitudes in the coming months, depending in part on the future path of mortgage rates,” he added.