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The Fannie Mae Home Purchase Sentiment Index (HPSI) increased for the first time in nine months in November, though the index reading remains just above the all-time low set during October and significantly lower than its reading during November 2021. The HPSI increased 0.6 points to a reading of 57.3 in November. On a year-over-year basis, the full index is down 17.4 points.

Four of the index’s six components increased marginally month over month, including those associated with home buying and selling conditions. Despite the month-over-month increases, the components related to home buying and selling conditions remain well below their November 2021 levels, having declined on net 28 and 38 points, respectively, according to Fannie Mae.

“Both consumer home buying and home selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated,” says Doug Duncan, Fannie Mae senior vice president and chief economist.

Elevated mortgage rates continue to impact affordability, and 62% of respondents expect mortgage rates to rise even further over the next year compared with 10% of respondents who expect rates to decline over the same period.

“Consumers continue to expect mortgage rates to rise but home prices to decline, a situation we believe will contribute to a further slowing of home sales in the coming months, as both home buyers and home sellers have reason for apprehension,” says Duncan. “We expect mortgage demand to continue to be curtailed by affordability constraints, while homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”

According to Fannie Mae, the percentage of respondents who say it is a good time to buy a home in November was unchanged from the previous month at 16%, while the percentage who say it is a bad time to buy a home decreased 1 percentage point to 79%. The net share of respondents who say it is a good time to sell increased 6 percentage points month over month in November.

The percentage of respondents who believe home prices will go down in the next 12 months decreased 3 percentage points to 34%, while the share who think home prices will go up remained unchanged at 30%. The share believing home prices will stay the same increased 4 percentage points month over month to 30%.

According to Fannie Mae, the net share of respondents who are not concerned about losing their jobs decreased 13 percentage points month over month. The net share of those who say their household income is higher than it was 12 months ago remained unchanged month over month in November.

The HPSI distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey into a single number, reflecting current views and forward-looking expectations of housing market conditions. The index is constructed from answers to six National Housing Survey questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions.