Fannie Mae’s Home Purchase Sentiment Index (HPSI) [1]rose 4.5 points in May 67.5—increasing slightly from nearing an all-time survey low in April.
Four of the six HPSI components increased month-over-month, with consumers reporting a more optimistic view of homebuying and home-selling conditions. Also, fewer consumers reported expectations that mortgage rates will go up over the next year. Annually, the HPSI is down 24.5 points.
Doug Duncan, SVP and Chief Economist at Fannie Mae, said despite the declines in March and April, the housing market remains “substantially elevated” compared to historical data.
“Low mortgage rates have helped cushion some of the impact of the pandemic on consumer sentiment regarding whether it’s a good time to buy a home, which picked back up this month to late-2018 levels,” Duncan said. “Although weakened income perceptions and continuing job loss concerns, particularly among renters, are likely weighing on many would-be buyers, purchase mortgage applications have returned to mid-March levels when pandemic response measures began ramping up.”
He added that home-selling sentiment remains severely dampened due to economic concerns, though increased purchased activity may improve the confidence in potential sellers.
“As lockdown restrictions begin to ease across the country, we expect the economic recovery to be largely shaped by consumers’ decisions regarding when and how to re-engage in the economy. We believe this month's HPSI results and Friday's unexpectedly favorable labor market report to be encouraging signs for the months ahead,” Duncan said.
Fannie Mae revealed 52% of those surveyed felt it was a good time to buy, compared to the 32% saying it is a good time to sell. These both increased from April’s 48% and 29%, respectively.
Americans who felt it was a good time to buy peaked in 2020 at 59% in February. Elevated sentiments for home selling peaked at 67% in February.
Zillow reported previously [2]that newly-pending home sales fell 5.2% from the prior week. This represents a slight improvement from 7.1% weekly decline recorded during the same week in 2019.
Monthly, newly-pending sales are up 24.5% nationally and are positive in each of the top-35 metros where data is available.