How do consumers view housing? 7 facts agents should consider

by Peter Thomas Ricci


Fannie Mae’s National Housing Survey is among the more detailed inquiries into how everyday consumers view the U.S.’ housing market, and the Home Purchase Sentiment Index (HPSI) portion of the survey – which details how Americans view the buying and selling process – is particularly relevant to the day-in, day-out business of real estate agents.

Fannie’s latest survey, which sampled consumers in September, provided a nuanced portrait of how folks view the marketplace – and more importantly, how they view the market’s future.

Below, we have detailed seven of the survey’s biggest findings:

1. A Relative High Note – The HPSI has been on an interesting trajectory, the last five years. After rising steadily from 2011 to the summer of 2013, the index has bounced around in a largely horizontal fashion, and has moved little the last two years. And although the index did decline 2.6 percent to a reading of 82.8, it remains far above the 60 of March 2011.

2. A Good Time to Buy? – Even with the HPSI remaining at a high level, specific elements of the index declined in a marked fashion, most noticeably the section of the index that tracks consumer interest in homebuying. According to the index, 60 percent of respondents think now is a good time to buy, down from 63 percent in August; meanwhile, the share who think it is a bad time to buy rose 2 percentage points to 31. Contrasting those two metrics – Fannie calls it the “Net Good Time” measure – comes out to 29 percent, which is tied for the lowest level in the survey’s history.

3. A Great Time to Sell – While homebuyers are feeling pessimistic, home sellers are having the time of their lives. The share of respondents who think it a good time to sell was 53 percent, a slight dip from the summer’s 56 percent but far above the 39 percent of two years ago; amidst that rise, the share who think it a bad time to sell has fallen in equal measure, dropping from 51 percent in Sept. 2014 to 38 percent today.

4. Home Price Expectations – The dividing line between buyers and sellers is likely one of home prices, and indeed, the HPSI found that very few consumers expect prices to decline in the coming year. Only 9 percent expect prices to fall, compared to the 43 percent who think they will continue their ascent.

5. Mortgage Rate Armageddon – Another area contributing to the negative buyer sentiment is mortgage rates, where consumers are similarly united in their expectations. Forty-nine percent think rates will rise in the next 12 months, while only 5 percent think they will decline.

6. A Tight Lending Environment – Although consumers expect mortgage rates to rise, a majority still think it would be relatively easy to get a mortgage, with 52 percent of respondents voicing that view (compared to 45 percent who think it would be difficult). Furthermore, consumer views towards the mortgage market have trended positive the last two years, with only one month (July 2015) seeing mortgage sentiment turn negative.

7. Mixed Economic Messages – The HPSI also surveys consumers on their general economic sentiments, and the findings on that front were a spectacularly mixed bag. On one hand, consumers are feeling quite confident about their situation. Not only are 85 percent not concerned about losing their job, but 25 percent report a current household income that is “significantly higher” than it was 12 months ago, an increase from 22 percent during the summer.

On the other hand, consumers are quite dour about both their financial situation and the state of the economy. The share of respondents who expect their finances to improve over the next year fell from 47 percent to 41 percent, while the share who think they will stay the same rose from 37 to 45 percent. Even more, the share who think the economy is on the wrong track rose from 52 to 57 percent, while the share who think it is on the right track fell from 38 to 35 percent.

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