The confidence of consumers in the U.S. housing market is now at an all-time high, according to Fannie Mae’s Home Purchase Sentiment Index (HPSI) and National Housing Survey (NHS) for July 2016 released on Monday.
July’s HPSI rose by 3.3 points from June, up to an all-time survey high of 86.5. Each of the six components in the HPSI increased in July; the results indicated a more positive outlook in the more housing market-specific components of the HPSI, according to Fannie Mae.
One notable result of the HPSI is the share of consumers who said they would buy a home if they were to move, which increased in July up to 67 percent; meanwhile, the share of consumers who said they would rent if they moved fell down to 26 percent, tying an all-time low for the NHS (which polled 1,000 Americans via live telephone interview to assess their attitudes about housing and the economy).
“The HPSI reached a new survey high in July, but enthusiasm should be tempered because the increase only returns the index to a very gradual upward trend,” said Doug Duncan, SVP and chief economist at Fannie Mae. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers. Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.”
The net share of consumers who expect home prices to rise over the next 12 months jumped by 8 points from June to July (up to 41 percent) after falling from May to June; also, the net share of consumers who said they expect mortgage rates to go down over the next 12 months spiked by 5 points (up to 36 percent). The Household Income component of the HPSI increased by 3 percentage points in July up to 11 percent, after falling in June.