Is it a good time to buy? Many Americans don’t think so, according to the Fannie Mae [1] House Purchase Sentiment Index (HPSI) released recently. As consumers remained cautious about the housing outlook at the end of 2017 on the back of tax reforms discussions, The HPSI, which is one of the monthly indicators for Fannie Mae’s National Housing Survey, fell two points in December to 85.8 due to a decrease is four of the six HPSI components that make up this index.
The HPSI is constructed from answers to six National Housing Survey (NHS) questions that include whether they think it is a good or bad time to buy or sell a house, what direction they expect home prices and mortgage rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.
In December, the net share of respondents who said now was a good time to buy a home decreased 5 percentage points to 24 percent compared to November and was down 8 percentage points compared to the same period last year. Meanwhile, the net share who reported that now was a good time to sell a home remained flat at 34 percent and was up 21 percentage points year-over-year.
The net share who said home prices would go up in the next 12 months decreased 2 percentage points to 44 percent in December, while Americans also expressed a weakened sense of job security, with the net share who said they are not concerned about losing their job decreasing 6 percentage points to 68 percent.
Finally, the net share of consumers who said mortgage rates would go down over the next 12 months fell 1 percentage point in December to 52 percent, while the net share reporting that their income was significantly higher than it was 12 months ago rose 2 percentage points to 16 percent.
“Entering 2018, housing affordability remains a persistent challenge, particularly in rental markets, where consumer expectations for price increases over the next 12 months reached a new survey high,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.