Housing confidence generally improved in August as more expect mortgage rates to improve
The Fannie Mae Home Purchase Sentiment Index increased in August to near the record high set in June, indicating improved confidence in the housing market.
The index was 88 in August, up 1.2 points from last month and an increase of three points from the same month last year. Fannie Mae attributed the monthly improvement to increases in the number of people who think now is a good time to sell and those who expect improvements in mortgage rates.
August posted an increase of eight percentage points in the net share of those who said now is a good time to sell a home to 36%. The component is also up 21 percentage points from the year-ago level. Those who said it’s a good time to buy decreased by five percentage points to a net share of 18%, representing a year-over-year decrease of 16 percentage points. Survey respondents said these sentiments were primarily driven by high home prices.
The index also revealed an increase of four percentage points in the net share of those who believe mortgage rates will go down to 45%, while the net share of those who believe home prices will increase rose one percentage point to 48%. The index also found a slight decrease in job security sentiment, while sentiment towards changes in income remained unchanged.
“In the early stages of the economic expansion, home selling sentiment trailed home buying sentiment by a significant margin. The reverse is true today,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The net good time to sell share is now double the net good time to buy share, with record high percentages of consumers citing home prices as the primary reason for both perceptions. Such a sizable gap between selling and buying sentiment, if it persists, could weigh on the housing market through the rest of the year.”
