Americans are more confident in the housing market, reversing a five-month trend of declines in optimism, according to Fannie Mae’s Home Purchase Sentiment Index.
In January, the HPSI increased by two percentage points from the previous month to 82.7, reversing the previous five-month decline. This is up 1.2 percentage points annually. Within the index, four of the six components increased in January.
“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” said Doug Duncan, Fannie Mae senior vice president and chief economist.
The net share of Americans who believe home prices will increase over the next year rose by seven percentage points to 42%, and those who reported significantly higher household income increased by five percentage points to 15%. Those who say it’s a good time to sell a home increased by two percentage points 15%.
However, those who say it’s a good time to buy a home decreased by three percentage points to 29%. Also, consumers were slightly more confident about not losing their jobs, up one percentage point to 69%, but those who believe mortgage rates will go down remained unchanged.
“However, any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability,” Duncan said. “If consumers’ anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more.”
