Consumers are beginning to buy into the idea that mortgage rates might go down, at least according to responses to the June National Housing Survey (NHS).  However, that may not mean they have a lot of confidence in housing overall. 

Fannie Mae says its Home Purchase Sentiment Index (HPSI), based on some NHS questions, dipped a half-point from its May near-survey high to 91.5.  Without an 8-point improvement in the net positive responses to "Do you think mortgages rates will go down?" the index would have fallen far further.

While those who expect further easing of rates are still in the minority, the net for the question has risen to a negative 29 percent, there are far fewer naysayers than when the question bottomed out at -56.0 percent in December.

Responses to the remaining five NHS questions that are incorporated into the HPSI were either down or flat compared to the May survey. The net share of Americans who say it is a good time to buy a home decreased 4 percentage points to 23 percent and is 5 points lower than in June of 2018. The net share of those who say it is a good time to sell a home remained at 43 percent, 4 points lower than a year earlier.

Fewer than half of survey respondents now think home prices will continue to rise. Positive answers declined 2 points in June, to a net of 38 percent. This is 8 points lower than the same time last year.  Among those who expect further appreciation, the average increase expected has fallen from 3.1 percent to 2.5 percent in a month.

"Growing expectations that mortgage rates will remain steady suggest improved stability for housing affordability and helped keep the HPSI relatively flat this month, despite modest declines in other components," said Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae. "Regional variations in housing optimism appear to be tied to a divergence in housing affordability; for example, home purchase sentiment is higher in the Midwest and South than in the West and, to a lesser extent, the Northeast, where the lack of entry-level inventory and the resultant strong price appreciation has had a more profound impact on affordability. With fewer consumers expecting rates to jump back up - thereby creating less urgency to buy now - we expect housing market activity to remain stable."

The two non-housing related components of the HPSI also moved lower.  The net share of Americans who say they are not concerned about losing their job over the next 12 months decreased 3 percentage points both for the month and on an annual basis to 73 percent. There was a 1-point dip both month-over- month and for the year in the net share of those who say their household income is significantly higher than it was 12 months ago. That net is now 20 percent.

The NHS, from which the HPSI is constructed, is conducted monthly by telephone among 1,000 consumers, both homeowners and renters.  In addition to the six questions that form the framework of the index, respondents are asked questions about the economy, personal finances, attitudes about getting a mortgage, and questions to track attitudinal shifts.  The June 2019 National Housing Survey was conducted between June 1, 2019 and June 24, 2019.