Remaining near the survey’s all-time low set in October 2022, the Fannie Mae Home Purchase Sentiment Index (HPSI) increased 3.3 points in March to 61.3. Year over year, the HPSI is down 11.9 points.
Four of the six HPSI components increased month over month, according to Fannie Mae. Those associated with home-selling conditions and consumers’ sense of job security most notably increased.
“Despite the recent banking turbulence, the HPSI increased modestly in March, although it still remains near its historical low,” says Mark Palim, Fannie Mae vice president and deputy chief economist.
“With the spring home buying season now upon us, a large majority of consumers continue to believe that it’s a bad time to buy a home. Homeowners sharing this belief frequently cited ‘unfavorable mortgage rates’ as the primary reason for their pessimism, further corroborating the often-discussed disincentive—or ‘lock-in effect’—that many mortgage holders who may be considering moving have toward giving up their lower rates. By contrast, surveyed renters once again indicated that high home prices are their primary concern for buying a home.”
Remaining unchanged from February, the percentage of respondents who say it is a good time to buy a home was 20%, and those who say it is a bad time to buy stayed at 79%. Due to rounding, the net share of those who say it is a good time to buy decreased 1 percentage point month over month.
Respondents who say it is a good time to sell a home increased to 58% from 54%, and those who say it’s a bad time decreased from 44% to 40%. Month over month, the net share of those who say it is a good time to sell increased 8 percentage points.
Mortgage rate expectations for those who say rates will go down in the next 12 months decreased to 12% from 15%. The percentage who expects mortgage rates to go up decreased from 55% to 51%, and those who think they will stay the same increased from 28% to 34%, resulting in the net share of those who say it will go down in the next 12 months increasing 1 percentage point month over month.
In terms of home prices, respondents who say home prices will go up in the next 12 months increased from 30% to 32%, while the percentage who say home prices will go down decreased from 35% to 31%. Those who think home prices will stay the same increased from 33% to 35%. Month over month, the net share of those who say home prices will go up increased 4 percentage points.
“Unsurprisingly, consumers also expressed apprehension about the direction of home prices. In March, there was an even split among respondents who said home prices over the next 12 months will go up compared to those who expect them to go down,” adds Palim. “With affordability constraints, the lock-in effect, and home price direction uncertainty weighing heavily on consumers’ minds, we maintain our forecast that total home sales for the year will remain subdued.”
According to Fannie Mae, the percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 73% to 78%, and those who say they are concerned decreased from 24% to 21%. The net share of respondents who say they are not concerned about losing their job increased 7 percentage points month over month.
Down from 22%, the percentage of respondents who say their household income is significantly higher than it was 12 months ago is 20%, while those who say it is significantly lower decreased from 12% to 11%. The percentage who say their household income is about the same increased from 63% to 68%. Month over month, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 2 percentage points.
The HPSI combines information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey into a single number. The HPSI reflects current and forward-looking expectations of housing market conditions and complements existing data sources.
