Home Purchase Sentiment Index – Key Highlights

A Fannie Mae economist anticipates a rise in home sales activity this year as mortgage rates decrease. More consumers are already indicating that now is a good time to buy.

The Fannie Mae Home Purchase Sentiment Index (HPSI) rose by 3.2 points in June to 72.6, recovering from last month's dip and nearing the plateau set earlier this year.

In June, 19% of consumers said it was a good time to buy a home, up from 14% in May, which was a survey low. The share of consumers believing it’s a good time to sell also increased from 64% to 66%. Additionally, more consumers expect home prices and mortgage rates to rise over the next 12 months. In terms of household finance, the percentage of consumers feeling secure about their jobs increased to 79%, up by 4 percentage points compared to May. The full index is up 6.6 points year over year.

“Affordability concerns remain the primary driver of consumer housing sentiment, even as our survey showed a modest uptick in optimism about both homebuying and home-selling conditions,” said Mark Palim, Fannie Mae vice president and deputy chief economist.

“If mortgage rates decline through the end of the year, as we forecast, we expect home sales activity to pick up. However, progress will likely be slow due to the ongoing supply and demand imbalance. A significant majority of consumers still believe it’s a 'bad time' to buy a home and expect both home prices and mortgage rates to rise over the next year. This indicates little improvement in overall sentiment until there is meaningful progress in affordability, either through lower rates or increased supply. Conversely, the challenging purchase market creates an advantageous sales market, with respondents noting high home prices as the primary reason it’s a good time to sell."

Home Purchase Sentiment Index – Key Highlights

• HPSI Increase: The HPSI increased by 3.2 points in June to 72.6, up 6.6 points from the same time last year.
• Good/Bad Time to Buy: The percentage of respondents who believe it is a good time to buy a home increased from 14% to 19%, while those who believe it is a bad time decreased from 86% to 81%. This resulted in a 9 percentage point increase in the net share of those who say it is a good time to buy month over month.
• Good/Bad Time to Sell: The percentage of respondents who believe it is a good time to sell a home increased from 64% to 66%, while those who believe it is a bad time decreased from 35% to 33%. This led to a 4 percentage point increase in the net share of those who say it is a good time to sell month over month.
• Home Price Expectations: The percentage of respondents who expect home prices to rise in the next 12 months increased from 42% to 45%, while those who expect prices to fall decreased from 18% to 17%. The share expecting prices to remain the same decreased from 40% to 36%. Consequently, the net share of those expecting home prices to rise in the next 12 months increased by 3 percentage points month over month.
• Mortgage Rate Expectations: The percentage of respondents who expect mortgage rates to fall in the next 12 months decreased from 25% to 24%, while those expecting rates to rise increased from 31% to 33%. The share expecting rates to remain the same stayed at 42%. Thus, the net share of those expecting mortgage rates to fall over the next 12 months decreased by 2 percentage points month over month.
• Job Loss Concern: The percentage of respondents who are not concerned about losing their job in the next 12 months increased from 75% to 79%, while those concerned decreased from 24% to 20%. As a result, the net share of those who are not concerned about losing their job increased by 8 percentage points month over month.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 20% to 16%, while those saying it is significantly lower decreased from 12% to 10%. The percentage saying their income is about the same increased from 67% to 72%. Thus, the net share of those who say their household income is significantly higher than it was 12 months ago decreased by 2 percentage points month over month.

About Fannie Mae's Home Purchase Sentiment Index

The Home Purchase Sentiment Index (HPSI) consolidates 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 gauge consumers' evaluations of housing market conditions, addressing topics related to their home purchase decisions. The questions ask consumers whether they believe it is a good or bad time to buy or sell a house, what direction they expect home prices and mortgage rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.