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GSE Tracking Consumer Confidence

Five of the six components that make up Fannie Mae’s Home Purchase Sentiment Index (HPSI) saw monthly increases in July, and the overall HPSI increased to a survey high 93.7. 

The 8% increase in “Confidence About Not Losing Job” helped drive the index higher, according to Fannie Mae. Annually, the job confidence and “Mortgage Rates Will Go Down” components increased 16% and 24%, respectively. 

“Consumer job confidence and favorable mortgage rate expectations lifted the HPSI to a new survey high in July, despite ongoing housing supply and affordability challenges,” said Doug Duncan, Fannie Mae’s SVP and Chief Economist. “Consumers appear to have shaken off a winter slump in sentiment amid strong income gains. Therefore, sentiment is positioned to take advantage of any supply that comes to market, particularly in the affordable category. However, recent financial market events following when the survey data were collected could weigh on consumer views looking ahead.”

Other insights from the HPSI include: 

  • The net share of Americans who say it is a good time to buy increased 3% to 26%. 
  • Americans who feel now is a good time to sell increased 1% to 44%. 
  • The amount of Americans who say home prices will go up over the next year fell 1% to 37%. 
  • Those who believe mortgage rates will decline over the next year increased 1% to 28%. 

Low mortgage rates might be bringing buyers back to the market, as the Mortgage Bankers Association (MBA) revealed mortgage applications for the week ending August 2 increased 5.3%. 

Refinance activity also saw a spike, growing 12% from the week prior and increased by 116% from August of 2018. The Purchase Index fell 2% from the previous week. 

"The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the beginning of a trade war with China. The result was a sharp drop in mortgage rates, which will likely draw many refinance borrowers into the market in the coming weeks," said Mike Fratantoni, MBA SVP and Chief Economist. "The 30-year fixed rate mortgage fell to its lowest level since November 2016, and the drop resulted in an almost 12% increase in refinance application volume, bringing the index to a reading over 2,000—its highest over the same time period. We fully expect that refinance volume will jump even higher this week given the further drop in rates."

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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