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After Steady Increase, Homebuying Confidence Shifts

money, house, affordable, housing, buyingFannie Mae's Home Purchase Sentiment Index (HPSI) this month reported a 1.7 point decline in home-purchase sentiment following three consecutive months of increases, the researchers said. The HPSI stands at 80 points for November. Since last year at this time, the HPSI has dropped 11.5 points.

The decline in the HPSI can be attributed to net decreases in three components this month: mortgage rate outlook,
job loss concern, and buying conditions. Three components saw net increases: home price outlook, change in
household income, and selling conditions.

"The HPSI appears to have peaked for now as consumers continue to consider how COVID-19 impacts their ability to buy or sell a home," said Doug Duncan, Fannie Mae's Senior Vice President and Chief Economist. "This follows the HPSI's recovery of slightly more than half of the loss experienced during the first few months of the pandemic."

"Drilling down a bit, home purchase confidence has recovered more for homeowners than for renters, in part because homeowners have been less likely than renters to have had their jobs and finances impacted by the pandemic," Duncan continued. "Interestingly, the gap between the HPSI broken out by the homeowner and renter subgroups hit a survey high in August but, despite narrowing slightly, remains elevated and well above the survey average."

Some other highlights related to HPSI indicators for the month of November 2020 (access more info on the HPSI as well as the full research report on Fanniemae.com).

  • The net share of Americans who say it is a good time to buy decreased 3 percentage points—The percentage of respondents who say it is a good time to buy a home decreased from 60% to 57%, while the percentage who say it is a bad time to buy remained the same at 35%. 
  •  The net share of those who say it is a good time to sell increased 2 percentage points—The percentage of respondents who say it is a good time to sell a home remained the same at 59%, while the percentage who say it’s a bad time to sell decreased from 35% to 33%. 
  • The net share of Americans who say home prices will go up increased 8 percentage points month over month—The percentage of respondents who say home prices will go up in the next 12 months increased this month from 40% to 41%, while the percentage who say home prices will go down decreased from 20% to 13%. The share who think home prices will stay the same increased from 31% to 35%. As a result,
  •  The net share of Americans who say mortgage rates will go down over the next 12 months decreased 14 percentage points month over month—The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 11% to 8%, while the percentage who expect mortgage rates to go up increased from 32% to 43%. The share who think mortgage rates will stay the same decreased from 49% to 40%. 
  • The net share of Americans who say they are not concerned about losing their job decreased 6 percentage points month over month—The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 79% to 76%, while the percentage who say they are concerned increased from 21% to 24%. 
  • The net share of those who say their household income is significantly higher than it was 12 months ago increased 3 percentage points month over month—The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 23% to 24%, while the percentage who say their household income is significantly lower decreased from 20% to 18%. The percentage who say their household income is about the same increased from 55% to 57%.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media/Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning news, among others.
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