Home Purchase Sentiment Index Records Lowest Reading Since 2016

Fannie Mae’s Home Purchase Sentiment Index (HPSI) dropped 11.7 points in March to 80.8—the lowest reading since December 2016.

Five of the six HPSI components declined month-over-month, including the number of consumers concerned about losing their job over the next year. Fannie Mae also says consumers also reported homebuying and selling conditions have worsened and they have a “more pessimistic” view of home-price growth. 

The HPSI is down 9 points year-over-year. 

Doug Duncan, SVP and Chief Economist at Fannie Mae, said attitudes about the current home-selling environment have “deteriorated” and have fallen to their lowest level since January 2017.

“A survey record one-month drop in optimism about the direction of the economy appears to have weakened consumers’ views of both the current home-selling and homebuying environment, though the latter is likely buffered in part by low mortgage rates,” Duncan said. “When asked why it’s a bad time to buy or sell a home, approximately 7% of consumers offered COVID-19 as an unprompted response, one of the highest percentages of non-standard answers in the survey’s history. We expect these developments to weigh heavily on housing activity during the spring/summer homebuying season.”

The share of Americans who believe now is a good time to buy fell from 59% to 56%, while the percentage of Americans who believe now is a band time to buy increased to 36% from 32%. 

In regards to home prices, the number of Americans who say home prices will go up over the next year fell from 47% to 39%. The share of consumers who believe home prices will stay the same fell to 32% from 38%. 

A large increase was reported on whether Americans believe mortgage rates will go down over the next year, rising from 8% to 20% in March. Those who believe mortgage rates will go up rose one percentage point to 39%. 

Freddie Mac’s latest Primary Mortgage Market Survey found that the average 30-year fixed-rate mortgage fell to 3.33% for the week ending on April 2. The average rate for the prior week was 3.5%.