Fannie Mae’s Home Purchase Sentiment Index (HPSI) finally reversed course in November, breaking an eight-month streak of decreases but remaining near its all-time low point.
The HPSI, which is derived from a survey that assesses consumer attitudes toward housing, increased by 0.6 points during the month, reaching a reading of 57.3. It is the first such increase for the index in nine months, although its reading is still hovering around the record low of 56.7, set in October. Year over year, the HPSI is down 17.4 points.
The survey consists of six components based on questions about the housing market and the economy at large. Four of these components saw a moderate increase from October, including those tracking attitudes on homebuying and selling conditions. Due in large part to high mortgage rates, however, the buyer and seller components are far below the levels seen at this time last year. And according to the survey, consumers believe things are headed in the wrong direction on the pricing front, with 62% of respondents anticipating that mortgage rates will keep rising over the next year.
“Both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Following eight months of consecutive declines, the HPSI did tick up slightly in November but is essentially unchanged since hitting its all-time low last month.
“Consumers continue to expect mortgage rates to rise but home prices to decline, a situation that we believe will contribute to a further slowing of home sales in the coming months, as both homebuyers and home sellers have reason for apprehension. We expect mortgage demand to continue to be curtailed by affordability constraints, while homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”