Fannie Mae's HPSI hits two-year peak
A fresh wave of optimism is sweeping across homeowners looking to sell, according to the latest findings from Fannie Mae’s Home Purchase Sentiment Index (HPSI).
In February, the HPSI climbed by 2.1 points to a nearly two-year high of 72.8, marking a consistent rise over the past three months. This boost is largely driven by growing confidence among homeowners that now is the opportune time to sell, with 65% echoing this sentiment, a notable increase from 60% the previous month. However, the outlook for buying a home remains daunting for many, with only 19% of consumers feeling optimistic about purchasing a home at this time.
“The HPSI increased for the third straight month, continuing its slow but steady rise from the low-level plateau observed through much of 2023,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
He pointed to the marked improvement in sentiments toward selling, which could signal an influx of existing home listings in the near future. He also noted a lingering optimism among consumers that mortgage rates might see a decline over the next 12 months, which could potentially energize the housing market even more.
“If their expectations come true and rates move closer to the 6% mark by the end of 2024, it’s likely that consumer sentiment on both sides of the transaction will improve, perhaps leading to a further thawing of the housing market. A decline in mortgage rates - and the resulting uptick in sentiment - would obviously bode well for the upcoming spring homebuying season, although affordability will likely remain a significant challenge for buyers, at least until there’s a meaningful addition to net supply,” Duncan said.
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Diving deeper into the HPSI’s components for February reveals more about prevailing housing market attitudes. A slight improvement was seen in the perception of it being a good time to buy, while the sentiment towards selling strengthened significantly. Expectations for home prices in the next 12 months also saw a positive adjustment, with more respondents predicting increases. However, there was a slight dip in the number of people expecting mortgage rates to decrease, reflecting mixed feelings about the future trajectory of rates.
In addition, concerns over job security saw a slight uptick, even as some respondents reported a rise in household income compared to the previous year.
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