Homebuyers are getting more positive about being able to afford a home, according to the latest data from the Home Purchase Sentiment Index (HPSI) by Fannie Mae.
According to Fannie Mae, the HPSI rose 1.2 points in January primarily due to "an 8-percentage point jump in the net share of Americans who reported substantially higher household income in January compared to the same period last year.
The net share of Americans saying it was a good time to buy a home also increased 4-percentage points in January to 15 percent. The report indicated that this component was down 12 percentage points in January 2018. However, the net share of those saying that it was a good time to sell a home decreased 1 percentage point to 35 percent, down 3 percentage points from the same time last year.
"Movement among the HPSI components points to possible housing affordability relief in 2019," said Doug Duncan, SVP and Chief Economist at Fannie Mae. "The net share of consumers expecting home prices to increase over the next year has declined further, falling to the lowest level since late 2012."
In fact, the net share of consumers who expected an increase in home prices has been falling for four consecutive months. In January it fell another percentage point to 30 percent.
The net share of consumers who said that mortgage rates would decline over the next 12 months also increased 3 percentage points to -53 percent. "Fewer consumers since last summer, on net, believe that mortgage rates will rise over the next year, a sentiment consistent with the Fed's statement at its January meeting that it will be patient with future target rate adjustments," Duncan explained.
Additionally, he said that the results of the latest HPSI were in line with Fannie Mae's forecast that "amid improving affordability conditions, home sales should stabilize in 2019 after declining last year for the first time in four years."