Consumers stay optimistic abouit economy but less about home buying and selling

Consumers’ optimism about the housing market dropped in February even as they remained optimistic about the overall economy, according to the Fannie Mae Home Purchase Sentiment Index (HPSI).

The HPSI for February showed that “consumers’ continuing optimism about economic conditions seems to be balancing with softening attitudes toward the housing market,” according to Doug Duncan, Fannie Mae’s senior vice president and chief economist.

Last month’s HPSI showed a decrease of 0.4 points to 84.3, which reversed some of the growth seen in January. The eight-percentage-point jump in the job confidence component of the HPSI compensated for the nine-percentage drop in the net share of Americans who reported considerably higher household income than last year’s.

"Job confidence reached a new survey high, but consumers were less optimistic about home buying and selling conditions than they were a year ago,” Duncan said. “Notably, home price growth expectations have trended significantly downward, with the net share of consumers expecting home prices to rise falling 19 percentage points from its survey high established at the start of 2018.”

But not all were convinced that now is the best time to buy a home.

“While declining home price expectations may point to improving affordability, the share of consumers who think it's a bad time to buy has grown over the last year, and high home prices remain the most frequently cited concern. It is plausible that consumers believe that price gains could decelerate further, making it worthwhile to wait rather than act now," said Duncan.

Other key findings from the Home Purchase Sentiment Index include:

• The net share of Americans who say it is a good time to buy a home remained unchanged this month at 15%. This component is down seven percentage points from the same time last year.
• The net share of those who say it is a good time to sell a home decreased five percentage points to 30%. This component is down six percentage points from the same time last year.
• The net share of those who say home prices will go up increased three percentage points to 33%. This component is down 12 percentage points from the same time last year.
• The net share of Americans who say mortgage rates will go down over the next 12 months increased one percentage point to -52%. This component is up five percentage points from the same time last year.
• The net share of Americans who say they are not concerned about losing their job increased eight percentage points to 81%. This component is up 10 percentage points from the same time last year.
• The net share of those who say their household income is significantly higher than it was 12 months ago decreased nine percentage points to 18%. This component is up one percentage point from the same time last year.