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What Factors are Driving Consumer Confidence?

fannie-maeConsumers are exuding confidence about selling their home in the current housing environment, which could bode well for the continued supply troubles.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) showed that those surveyed that believe now is a good time to sell a home approached an all-time survey high in April.

Fannie Mae’s National Housing Survey (NHS) polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. The HPSI draws information about consumers’ home purchase sentiment from Fannie Mae's NHS into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision-making.

The index rose 3.5 points to 83.7 in April, recovering from an 18-month low in March. The report also noted that overall consumer housing sentiment has remained generally flat.

The HPSI Good Time to Sell posted the largest increase among the six HPSI components. According to Fannie Mae, the net percentage of those who say it is a good time to sell increased 16 percentage points to 15 percent. On the other hand, the Good Time to Buy component fell to an all-time survey low, creating the narrowest gap on record between these two measures. Those who say that it is a good time to buy a house fell 3 percentage points to 30 percent.

Fannie Mae Home Purchase Sentiment Index“We can partially attribute the sizable gain in April in home selling optimism both to a correction for last month’s unexpected dip and to typical seasonal strength in housing activity in the spring and summer,” said Doug Duncan, SVP and Chief Economist at Fannie Mae. “Even after accounting for these factors, continued tight housing supply has led to renewed strength in home price appreciation, making selling a home a more attractive prospect this year in particular. This improved sentiment could provide an extra boost of much-needed supply for the spring selling season.”

Fannie Mae found that those who say that home prices will go up rose 3 percentage point to 37 percent. Meanwhile, the net share of those who say mortgage interest rates will decrease fell 1 percentage point to negative 46 percent.

Consumers also indicated that they are not concerned about losing their jobs, with this component rising 6 percentage points to 74 percent, nearly recovered from the 7 percentage point decrease in March. Household income remained flat for Americans, with those reporting higher wages in April remaining at 11 percent.

 

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