On Tuesday Fannie Mae reported that the Fannie Mae Home Purchase Sentiment Index (HPSI) increased by 5.6 percentage points in February, to 88.3, a new all-time high.
Five of the six components that comprise the HPSI were up, and three hit record highs. The net share of Americans who reported that now is a good time to buy rose by 11 percentage points, to 40 percent, strongly rebounding from last month’s survey low.
As for the net percentage of those thinking it’s a beneficial time to sell, it increased by 7 percentage points to 22 percent, thus reaching a new survey high.
Respondents who say that home prices will go up increased by 3 percentage points in February, to 45 percent; while the net share of people believing that mortgage rates will go down over the next twelve months remained constant for the third consecutive month at minus 55 percent.
The Americans surveyed who are not concerned about possibly losing their job rose 9 percentage points to a new survey high of 78 percent and those who say their household income is significantly higher than it was 12 months ago rose 4 percentage points to 19 percent in February, continuing the increase from January and reaching a new survey high.
“The latest post-election surge in optimism puts the HPSI at its highest level since its starting point in 2011. Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time homebuyers,” said Doug Duncan, Fannie Mae’s SVP and Chief Economist. “Preliminary research results from our team find that millennials are accelerating the rate at which they move out of their parents’ homes and form new households”.
How it’s done.
The HPSI is constructed from answers to six National Housing Survey (NHS) questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions, asking them if:
- 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
- Whether their incomes are higher than they were the previous year.
The NHS polled 1,000 Americans with phone interviews (60 percent via cell phones) to answer 100 questions.