Fannie Mae's Home Purchase Sentiment Index (HPSI), a measure derived from the company's monthly National Housing Survey (NHS), was essentially unchanged in February, dipping 0.4 point from the January reading to 84.2. The Index is down 1.5 percentage points compared to February 2018.
Fannie Mae said the largest change among the six index components was a 9-percentage point drop in the net share of Americans reporting substantially higher household income compared to the same time last year. It was an 8-point increase in the net response to this same question that drove January's 1.2 percent rise in the HPSI. The 18 percent net positive response to the question is 1 point higher than in February 2018.
On the other side of the ledger was an 8-point jump in the job confidence component. Only 9 percent of respondents expressed fear they could lose their jobs in the next 12 months, a net positive of 81 percent.
Doug Duncan, Fannie Mae's senior vice president and chief economist said, "The HPSI held steady in February, as consumers' continuing optimism about economic conditions seems to be balanced with softening attitudes toward the housing market. Job confidence reached a new survey high, but consumers were less optimistic about home buying and selling conditions than they were a year ago.
"Notably, home price growth expectations have trended significantly downward, with the net share of consumers expecting home prices to rise falling 19 percentage points from its survey high established at the start of 2018. While declining home price expectations may point to improving affordability, the share of consumers who think it's a bad time to buy has grown over the last year, and high home prices remain the most frequently cited concern. It is plausible that consumers believe that price gains could decelerate further, making it worthwhile to wait rather than act now."
The net share of Americans who say it is a good time to buy a home remained unchanged this month at 15 percent. This component is down 7 percentage points from the same time last year. Positive attitudes toward selling a home decreased 5 points to a net of 30 percent, a 6-point year-over-year decline.
There is no longer a widespread assumption that home prices will continue to rise, that measure, while 3 points higher than last month is down 12 points year-over-year with only a net one third of respondents expecting increases. At the same time, recently lower mortgage rates may be contributing to the marginal increase in the percentage of respondents who expect those rates to decline over the next 12 months although a 1-point uptick in those hopes (5 points on an annual basis) still left the net at -52 percent.
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.
The NHS, from which the HPSI is constructed, is conducted monthly by telephone among 1,000 consumers, both homeowners and renters. Respondents are asked more than 100 questions to track attitudinal shifts. The January survey was conducted between February 2, 2019 and February 24, 2019. Most of the data collection occurred during the first two weeks of this period.