The HPSI, which looks at consumers’ current views and expectations of housing market conditions, climbed 1.6 points to reach its peak of 85.3 in May. The uptick is a notable rebound over March’s index, which hit an 18-month low of 80.2.
Fannie Mae credited consumers' household income growth perceptions with boosting the index. Three of the six HPSI components Fannie studied increased in May, led by a 7-percentage-point increase in consumers reporting that their income was significantly higher than it was 12 months ago.
Ironically, the HPSI’s Good Time to Buy, Good Time to Sell and job security dropped in May. The Good Time to Buy figure fell 1 percent to 29 percent, while Good Time to Sell fell 2 points, reaching an all-time survey low again in May. However, selling remains an attractive option for 52 percent of consumers, who believe it is a good time to put a home up for sale.
About 72 percent of Americans reported being unconcerned about losing their job in May, which was a 2 percent from April. But while the month-to-month trend is improved, Doug Duncan, senior vice president and chief economist at Fannie Mae, isn’t counting on things to remain quite so kosher.
“While the May increase in income growth perceptions could provide further support to prospective home buyers as the spring/summer home buying season gains momentum,” Duncan said, “the effect may be muted by May’s discouraging jobs report.”
Additionally, 5 percent more consumers reported that they expect home prices to rise over the next year, which translates to a little less than half of consumers surveyed. Meanwhile, 3 percent more consumers expect mortgage rates to drop over the coming 12 months.
Still, the current low-mortgage-rate environment has helped ease pressure on the market, Duncan said.
“Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it’s a good time to buy a home,” he said.