Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose 3.5 points in September, continuing the rapid rebound of consumer confidence in the housing market since the lows brought about by the COVID-19 pandemic.
The month-to-month growth brought the HPSI to 81.0, the second straight month of positive movement for the index. The HPSI has now recovered more than half of its decline from the beginning of the pandemic, according to Doug Duncan, Fannie Mae’s senior vice president and chief economist.
“Consumers’ home price expectations were up strongly this month, with high home prices playing an increasingly – though unsurprisingly – important role in driving both the increase in ‘good time to sell’ sentiment and the decline in ‘good time to buy’ sentiment,” Duncan reported.
Indeed, the percentage of respondents who said that now is a good time to sell a home grew from 48% to 56%. Meanwhile, the percentage who said it’s a bad time to sell fell from 44% to 38%, resulting in the net share of those who say it’s a good time to sell growing 14 percentage points.
At the same time, the net share of respondents who say it’s a good time to buy went down 8 percentage points. Fifty-four percent of respondents say it’s a good time to buy, down from 59% last month, while the percentage who say it’s a bad time to buy rose to 38% from 35%.
Two other HPSI components increased month to month: The net share who said home prices will go up increased 17 percentage points, and the net share who said that they are not concerned about losing their job increased 11 percentage points.
The other two components of the HPSI decreased from August. The net share of respondents who believe mortgage rates will go down in the next year is down 11 percentage points, while the net share of those who say their household income is significantly higher than it was a year ago decreased 2 percentage points.
Year over year, the HPSI is down 10.5 percentage points, though strong market fundamentals are in place to buttress the consumer sentiment rebound in the near term. As for the future, uncertainty still reigns, though market health hinges in large part on mitigating the current historical shortage of homes for sale.
“Going forward, we believe the wild card to be whether enough sellers enter the market to continue to meet the strong homebuying demand,” Duncan said. “The home purchase market requires the proper mix of home price growth and continued economic recovery to achieve sustainable levels of housing activity.”