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New Fannie Mae Index Finds Homebuyers More Confident in 2015

by Chuck Green

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Fannie Mae’s Economic & Strategic Research Group has launched the Fannie Mae Home Purchase Sentiment Index (HPSI), which provides details about the direction of the housing market.

The index reports that in August, the HPSI dropped to 80.0 from 0.5 points, and is up 5.3 points from a year ago.

The index reflects four years of data, and shows results from consumer-focused National Housing Survey (NHS) into a single monthly, predictive indicator. The HPSI is composed of six NHS questions that help evaluate buyer decisions when purchasing a home. Questions include: was it is a good or bad time to buy or to sell a house; the direction they expect home prices and mortgage interest rates to move; how concerned they are about losing their jobs; and whether their incomes are higher than they were a year earlier.

HPSI Respondent Highlights

Here are the statistics the HPSI found from the surveys respondents:

  • 63 percent of respondents said that it was a good time to buy a house rising 2 percent from last month.
  • 47 percent of respondents said that it was a bad time to buy a house an increase from 44 percent.
  • 47 percent of respondents respondents who said that home prices will go up over the next 12 months fell. The percent who said that home prices will go down rose to 9 percent.
  • 54 percent or respondents expected mortgage interest rates to go up in the next 12 months rose 3 percent; those who felt mortgage rates will go down remained at 5 percent.
  • 83 percent of respondents said they are not concerned with losing their job increased, while those concerned with losing their job fell to 16 percent.
  • 24 percent of respondents said their household income was significantly higher, while those who say it is significantly lower fell to 12 percent.

Fannie Mae expects to release the HPSI the seventh day of each month.

Optimistic Expectations

Doug Duncan, the senior vice president and chief economist at Fannie Mae, said a number of economic factors contributed to Augusts’s HPSI.

“Consumer attitudes toward the current home selling climate have slid back to their April 2015 level, contributing to a slight decline in the August HPSI reading relative to its four-year high, reached two months ago,” Duncan said. “Expectations of rising mortgage rates and increasing concerns in the last six months about the direction of the economy seem to be weighing on consumers’ assessment of the housing market. Those who think it’s a good time to buy or sell a home have consistently pointed to favorable mortgage rates as the primary reason for their optimism. Those who think it’s a bad time to buy or sell a home have consistently pointed to unfavorable economic conditions as the primary reason for their pessimism. Still, the four-year upward trend in the HPSI indicates that consumers remain fairly optimistic about the housing market.”

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