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Breaking a streak of three consecutive monthly increases, the Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 3.6 points to 58.0, returning the index closer to its all-time low in October 2022. Year over year, the HPSI is down 17.3 points, its lowest level since the survey was first taken in 2010.

According to Fannie Mae, four of the six components decreased month over month in February with job security and home selling conditions raising concern. While both components remain positive in net for February, 44% of consumers reported it’s a bad time to sell, up from 39% the previous month, and 24% are concerned about losing their job in the next 12 months, up from 18% in January.

Those who think it’s a good time sell decreased from 59% to 54%. The net share of those who say it’s a good time to sell decreased 10 percentage points month over month.

"The HPSI declined this month and is now just slightly above the survey low set late last year. The decline was partly driven by a substantial decrease in consumers' sense of home selling conditions, with most respondents who indicated it's a 'bad time to sell' citing unfavorable economic conditions and mortgage rates as the primary reasons for that belief,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “With home selling sentiment now lower than it was pre-pandemic—and home buying sentiment remaining near its all-time low— consumers on both sides of the transaction appear to be feeling cautious about the housing market.”

The percentage of respondents who said it’s a good time to buy increased from 17% to 20%, while those who said it is a bad time to buy decreased from 82% to 79%. The net share of those who said it is a good time to buy increased 5 percentage points month over month.

Home price expectations reflected a 1 percentage point month-over-month increase in the net share of those who said home prices will go up. Respondents who said mortgage rates will go down in the next 12 months increased from 13% to 15%, while those who expect rates to go up increased from 52% to 55% and those who think it will say the same decreased 33% to 28%. Month over month, the net share of respondents who think rates will go down over the next 12 months decreased 1 percentage point.

“We believe these results corroborate our expectation for subdued home sales in the coming quarters, particularly now that mortgage rates have begun rising again. Additionally, this month's survey indicated an increase in job security concerns, which we'll continue to monitor closely, since labor market uncertainty could play yet another factor in slowing housing activity," says Duncan.

As mentioned, the percentage of respondents who reported that they are not concerned about losing their job in the next 12 months decreased from 82% to 73%, while those who said they are concerned increased from 18% to 24%. Month over month, the net share of those who said they are not concerned about losing their job decreased 15 percentage points.

Respondents who reported their household income is significantly higher than it was 12 months ago remained unchanged at 22%, according to Fannie Mae. The percentage who said their income is significantly lower increased from 10% to 12%, and those who said household income is about the same decreased from 67% to 63%, resulting in the net share of those who said their household income is significantly higher than it was 12 months ago decreasing 1 percentage point month of month.

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.