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Home Purchase Sentiment Hits Plateau as High Home Prices Stymie Trade-Up Confidence
Wednesday, August 8, 2018 6:40 AM

The Fannie Mae Home Purchase Sentiment Index (HPSI) fell in July for the second consecutive month, dropping 4.2 points to 86.5, after reaching survey highs in April and May. The decline can be attributed to decreases in four of the six HPSI components.

"Home purchase sentiment seems to have reached a plateau, with potential home sellers likely struggling to find a home to buy amid slow supply growth, expectations for rising mortgage rates, and significant home price increases," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Survey respondents cite 'high home prices' as the top reason why it is both a good time to sell a home and bad time to buy a home. This suggests a contributing factor to the low supply of existing homes for sale is that current owners are reluctant to trade up in a rising price market. Additionally, the shares of consumers citing favorable mortgage rates as a reason why it's a good time to buy or sell a home both dropped to fresh survey lows."

Component Highlights

Fannie Mae's 2018 Home Purchase Sentiment Index (HPSI) decreased in July by 4.2 points to 86.5. The HPSI is down 0.3 points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a home fell 4 percentage points from last month to 24 percent.
  • The net share of those who say it is a good time to sell fell 6 percentage points from last month's survey high to 41 percent.
  • The net share of those who say home prices will go up fell 7 percentage points to 39 percent, falling under 40 percent for the first time since December 2016.
  • The net share of Americans who say mortgage rates will go down over the next 12 months rose 1 percentage point to -52 percent.
  • The net share of Americans who say they are not concerned about losing their job fell 11 percentage points from last month to 65 percent.
  • The net share of those who say their household income is significantly higher than it was 12 months ago rose 2 percentage points to 21 percent, matching the survey high from May 2018.

To learn more about Fannie Mae's Home Purchase Sentiment Index and National Housing Survey consumer attitude measures, please click here.