Consumers are Generally Positive Toward Housing

Consumer housing sentiment remained generally positive, which bodes well for the continued growth of housing in the United States, according to Fannie Mae’s Home Purchase Sentiment Index (HPSI) for August 2016 released on Wednesday.

Despite experiencing some over-the-month declines, including an overall decline of 1.5 points down to 85.0 in August (falling from July’s reading of 86.5, an all-time high in the one-year history of the HPSI) and monthly declines in four of the six components that make up the HPSI, the index continued on its gradual upward trend from August 2015.

“Consumers have a fairly optimistic 12-month outlook on housing at the end of the summer home-buying season, supported by increased job confidence and more favorable expectations regarding their personal financial situations compared with this time last year,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The return to a slight upward trend in the HPSI during the spring and summer is, thus far, in line with our forecast, which calls for 4 percent growth in home sales in 2016 to the best level since 2006 and continued improvement for 2017.”

Notably in the August HPSI, consumers were more positive toward employment from July (an increase of 4 percentage points) and the share of Americans who said they believe now is a good time to buy a house rose by 1 percentage point up to 34 percent, the third consecutive month with an increase. Americans were also less concerned with losing their jobs, according to the HPSI; 73 percent of respondents in August said they were not concerned, an increase of 4 percentage points from July.

After hitting an all-time high of 20 percent in July, the net percentage of survey respondents who said they believe now is a good time to sell a house fell by 5 percentage points in August down to 15 percent. Also in August, the net share of respondents who said they believe home prices will go up dropped by 6 percentage points down to 35 percent.

The net share of respondents who said they believe mortgage rates will go down during the next year reversed course in August after three months of increases, falling by 2 percentage points down to minus 38 percent, according to Fannie Mae.