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Home Purchase Sentiment Index Drops Again
Thursday, November 10, 2016 6:40 AM

The Fannie Mae Home Purchase Sentiment Index (HPSI) dipped 1.1 points to 81.7 in October, the third decrease in as many months. Four of the six components that comprise the HPSI fell during the month. The share of consumers reporting significantly higher income over the past year experienced the largest drop, decreasing eight percentage points on net.

The net share of consumers expecting home prices to go up in the next year fell three percentage points, and those who expect mortgage rates to drop and those who are confident about not losing their job each dropped by one percentage point in October. However, more consumers said they believe now is a good time to buy and a good time to sell a home, increasing two and four points on net, respectively.

"The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today. Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate.

"Furthermore, consumers' perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index. However, this component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future."

Learn more about Fannie Mae's Home Purchase Sentiment Index and National Housing Survey consumer attitude measures.