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Fannie Mae: Home Purchase Sentiment Index Decreases
Monday, July 18, 2016 6:35 AM

Fewer Consumers Expect Home Prices, Mortgage Rates to Keep Climbing; Stagnant Wages Weigh on Housing Outlook

Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased 2.1 points to 83.2 in June, down from May’s all-time survey high, as more consumers report mixed views toward housing and income growth.

Among those surveyed, the share who said now is a good time to sell a home increased 5 percentage points on net to a survey-high of 18 percent, and those saying now is a good time to buy a home rose 3 percentage points on net to 32 percent. The share of consumers who expect home prices to go up over the next 12 months dropped 9 percentage points on net.

In addition, those reporting that their household income is significantly higher than it was 12 months ago dropped 10 percentage points on net in June, and the net share of consumers who are not concerned about losing their jobs fell 4 percentage points. Fewer consumers also reported a positive outlook on the state of the economy; those who think the economy is on the wrong track ticked up to 59 percent in June.

“The HPSI’s pullback in June from last month’s survey-high reading suggests a slight weakening in the 12-month outlook for housing activity,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Pending home sales have pulled back in the face of continued home price growth, and we’re seeing some softening in the higher priced components of the market.

"Growing pessimism about the overall direction of the economy gives us further pause as it now stands at the highest level we’ve seen in our National Housing Survey in the last two years. Meaningful improvement in the housing market going forward will likely require consistent upward movement in consumers’ income growth perceptions, which have thus far been stagnant. Also helpful would be an acceleration of supply accumulation of entry-level homes, which would moderate the growth of real home prices and increase affordability.”

For detailed findings from the June 2016 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Consumer Attitude Measures page on fanniemae.com. Also available on the site are in-depth topic analyses, which provide a detailed assessment of combined data results from three monthly studies of NHS results.