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Fannie Mae: Americans Have Positive Outlook on Housing

Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose for the third consecutive month, growing 1.3 points in January to 93—just in sight of the survey’s high of 93.8. 

Four of the six HPIS components, including the share of Americans who believe mortgage rates will go down over the next year, increased from December. The share of Americans who believe mortgage rates will go down is now 55%. 

On a year-over-year basis, the HPSI is up 8.3 points, and according to Fannie Mae, this is due in part to the consumers’ “increasingly positive view” that it is a good time to buy a home. 

“The HPSI posted another strong reading to open the new year, helped in large part by the upward trend in the share of consumers saying they expect mortgage rates to remain steady,” said Doug Duncan, SVP and Chief Economist. “Low rates continue to be a key driver of consumer optimism about both current homebuying and home-selling conditions. Favorable views on job security and personal financial expectations reflect the strength of the labor market, which we believe will continue to bolster housing demand. 

“With much-needed inventory set to come online this year, offering a modicum of relief to the shortage of entry-level supply, this month’s HPSI reading remains consistent with our latest macroeconomic forecast and our theme for 2020: A Resilient Economy Overcomes Risks to Drive Housing.”

The number of Americans who believe now is a good time to buy was unchanged from December at 59%, while those who think it is a bad time to buy fell from 32% to 30%. 

Sixty-six percent of Americans think now is a good time to sell, which is a marginal month-over-month increase from 65%. Those who believe it is a bad time to sell fell to 21% from 22%. 

However, half of all surveyed said they think home prices will increase over the next year—an increase from the prior month’s 48%. 

Current homeowners are reaping the rewards of falling mortgage rates, as Black Knight reported 11.3 million are now eligible for refinancing. Black Knight estimates average potential monthly savings of $3 billion. 

Freddie Mac reported mortgage rates are at a 3.5-year low at 3.45%. The average borrowers could save $268 a month. 

LendingTree also found that almost 75% of refinance applications are approved. For the 25% of applications denied, the top reasons for denial were debt-to-income ratio, credit history, income application, and insufficient collateral. 

A too high debt-to-income ratio caused 26.1% of all denials. Most of the denials came in expensive metros such as San Jose, California; Honolulu; Bridgeport, Connecticut; San Francisco; and New York. 

Ogden, Utah’s, 83.8% approval rate was highest in the nation. Ogden’s leading cause of denial was credit history at 25.6%. Madison, Wisconsin, was a close second at 82.9. 

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.
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