Fannie Mae's Home Purchase Sentiment Index™ (HPSI) rose 1.6 points to 85.3 in May, a new all-time high and rebounding from an 18-month low in March.
Three of the six HPSI components increased in May, led by a 7 percentage point hike in the share of consumers reporting that their income was significantly higher than it was 12 months ago. Consumers who expect that home prices will go up during the next 12 months rose 5 percentage points, followed by a 3 percentage point increase in consumers who expect mortgage interest rates to go down during the next 12 months.
Changes in the HPSI Good Time to Buy, Good Time to Sell, and job security components were minimal in May. The HPSI Good Time to Buy figure fell 1 percentage point, reaching an all-time survey low again in May. Slightly more consumers reported concern about losing their job compared to April, but the overall trend has continued to decrease.
"Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it's a good time to buy a home," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The current low mortgage rate environment has helped ease this pressure, and fewer than half of consumers expect rates to go up in the next year. While the May increase in income growth perceptions could provide further support to prospective home buyers as the spring/summer home buying season gains momentum, the effect may be muted by May's discouraging jobs report."
Fannie Mae's May 2016 HPSI rose 1.6 percentage points in May to 85.3. The Good Time to Sell component fell 2 percentage points. 52% of consumers believe it is a good time to sell a home. Overall, the HPSI is up 1 point since this time last year.
- The net share of Americans who say that it is a good time to buy a house fell 1 percentage point to 29%, reaching an all-time survey low for the second straight month.
- Selling sentiment fell slightly in May, with the net percentage of those who say it is a good time to sell falling 2 percentage points to 13%. However, an all-time survey high (52%) continue to believe it is a good time to sell.
- The net share of Americans who say that home prices will go up rose 5 percentage points to 42%, continuing the rising trend that began in March.
- The net share of those who say mortgage interest rates will go down rose 3 percentage points to negative 43%.
- The net share of Americans who say they are not concerned with losing their job fell 2 percentage points to 72%.
- The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 7 percentage points to 18%, reaching a new all-time survey high.