Fannie Mae's Home Purchase Sentiment Index (HPSI) reversed a five-month long decline in January, posting a 2-percentage point increase.  The Index, which summarizes consumer responses to six questions from Fannie Mae's monthly National Housing Survey, was at 82.7 following the January gain, 1.2 percentage points higher than in the January 2016.

Four of the six components in the survey rose in January.  The net share of Americans who believe that home prices will go up in the next 12 months increased by 7 percentage points to a net of 42 percent.  While not a component of the HPSI, the percentage increase in home prices expected by survey respondents rose from 2.1 percent in December to 3.2 percent.



The net share of consumers reporting significantly higher household income in the past 12 months rose by 5 percentage points in January and there was an increase of 1 percentage point to 69 percent in the net responses from consumers about their confidence in not losing their jobs. Those believing it is a good time to sell a house rose on net by 2 points but those who see it as a good time to buy declined 3 points making for a 29 percent three-way tie for the survey low with May and September 2016.   The net share of those who believe mortgage rates will go down remained unchanged at a negative 55%.

"Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we've seen in the nearly seven-year history of the National Housing Survey," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "However, any significant acceleration in housing activity will depend on whether consumers' favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability. If consumers' anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more."

Among notable changes to non-component survey questions, those who said they would buy a home the next time they moved declined from 68 percent of respondents in December to 65 percent while those who thought they would have difficulty getting a mortgage rose 5 percentage points to 46 percent.  There were significant changes in consumers answers about their expectations for their own personal financial situation over the next 12 months as shown in the graphic below.



The Home Purchase Sentiment Index (HPSI) distills information about consumers' home purchase sentiment from the NHS into a single number that reflects current views and forward-looking expectations of housing market conditions.  The NHS is conducted monthly by telephone among 1,000 consumers, both homeowners and renters.  Respondents are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI.  The January 2016 National Housing Survey was conducted between January 1 and January 21, 2017.