News Release

November 07, 2018

Housing Sentiment Continues Downward Trend Despite Favorable Economy

Matthew Classick

202-752-3662

WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased in October, falling 2.0 points to 85.7, continuing its recent downward trend. The decline can be attributed to decreases in five of the six components, including those measuring consumers’ home buying and selling attitudes. The net share of Americans who said it is a good time to buy a home fell 5 percentage points, and the net share who said it is a good time to sell a home fell 3 percentage points. Meanwhile, the net share of survey respondents who expect home prices to go up fell 2 percentage points, and the net share who expect mortgage rates to go down fell 1 percentage point. Finally, respondents also expressed a slightly more pessimistic view on job security, with the net share who are confident about not losing their job falling by 1 percentage point.

"After hitting a survey high during the spring home buying season, the HPSI has trended downward, declining in October to its lowest level in a year. While the October drop was broad-based – all but one of the six HPSI components declined – the net share of consumers who said it's a good time to buy a home posted the largest decrease, tying its second lowest reading in the survey's history," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The further erosion of buying sentiment occurred despite generally positive views of the economy. Among those who said it's a good time to buy, 30 percent – a record high – cited favorable economic conditions as the reason. Meanwhile, the share of consumers who think the economy is on the right track continued to grow, reaching a new survey high. The contrast between the survey's findings of weak home buying sentiment and overall economic optimism mirrors what we're seeing in the broader economy. While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion."

HOME PURCHASE SENTIMENT INDEX – COMPONENT HIGHLIGHTS

Fannie Mae's 2018 Home Purchase Sentiment Index (HPSI) decreased in October by 2.0 points to 85.7. The HPSI is up 0.5 points compared with the same time last year.

  • The net share of Americans who say it is a good time to buy a home fell 5 percentage points from last month to 21%.
  • The net share of those who say it is a good time to sell a home fell 3 percentage points to 35%.
  • The net share of those who say home prices will go up fell 2 percentage points to 37%.
  • The net share of Americans who say mortgage rates will go down over the next 12 months dropped 1 percentage point to -57%.
  • The net share of Americans who say they are not concerned about losing their job fell 1 percentage point to 78%.
  • The net share of those who say their household income is significantly higher than it was 12 months ago remained unchanged at 19%.

ABOUT FANNIE MAE'S HOME PURCHASE SENTIMENT INDEX

The Home Purchase Sentiment Index (HPSI) distills information about consumers' home purchase sentiment from Fannie Mae;s National Housing Survey® (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 HPSI is constructed from answers to six NHS questions that solicit consumers' evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

ABOUT FANNIE MAE'S NATIONAL HOUSING SURVEY

The most detailed consumer attitudinal survey of its kind, Fannie Mae's National Housing Survey (NHS) polled approximately 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. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). As cell phones have become common and many households no longer have landline phones, the NHS contacts 70 percent of respondents via their cell phones (as of January 2018). For more information, please see the Technical Notes. Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future. The October 2018 National Housing Survey was conducted between October 1, 2018 and October 25, 2018. Most of the data collection occurred during the first two weeks of this period. Interviews were conducted by PSB, in coordination with Fannie Mae.

DETAILED HPSI & NHS FINDINGS 

For detailed findings from the October 2018 Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.