The spring and summer homebuying seasons are likely to be better than expected. According to the Fannie Mae Home Purchase Sentiment Index (HPSI), both homebuyers and sellers are optimistic about the time to buy or sell real estate during these seasons.
The index jumped 5.5 points in March to 89.8 to reach its highest point since June 2018, Fannie Mae data indicated. The rise was primarily driven by increases in the "Good Time to Buy" and "Good Time to Sell" components which rose 7 and 13 percentage points respectively.
More consumers also expected interest rates to fall within the next 12 months. However, the net share of consumers who say home prices will go up increased 5 percentage points to 38 percent, down 4 percentage points from the same time last year.
“A brighter housing market outlook drove this month’s increase in the HPSI—a welcome sign from consumers as we enter the spring and summer homebuying seasons,” said Doug Duncan, SVP and Chief Economist at Fannie Mae. “The results further corroborate the positive effect of falling mortgage rates on affordability, which we expect will help support a rebound in home sales.”
The net share of Americans who said that mortgage rates would go down over the next 12 months increased 7 percentage points to -45 percent, according to Fannie Mae data. On the other hand, the net share of consumers who said their household income was significantly higher than 12 months ago increased 2 percentage points to 20 percent, up 3 percentage points from March 2018.
“Job confidence—little changed from last month’s survey high–also continues to support housing sentiment, while income growth perceptions firmed from both prior month and year-ago levels, potentially supporting an uptick in housing demand,” Duncan said. “Additionally, consumers appear to have regained some confidence in the housing market, with perceptions of both home buying and home selling conditions returning to their longer-term trends.”
The net share of Americans who said they are not concerned about losing their job decreased 1 percentage point to 80 percent. This component is up 9 percentage points from the same time last year, the Fannie Mae data indicated.