The Fannie Mae Home Purchase Sentiment Index® (HPSI) jumped 5.5 points in March to 89.8, reversing last month's slight decline and reaching its highest point since June 2018. The index was 1.5 points ahead of the same month last year.
Increases in the "Good Time to Buy" and "Good Time to Sell" components drove the measure of consumer sentiment higher, with the two rising 7 and 13 percentage points, respectively. Moreover, more consumers on net expect interest rates to fall within the next 12 months, as that component rose 7 percentage points this month.
"A brighter housing market outlook drove this month's increase in the HPSI – a welcome sign from consumers as we enter the spring and summer home buying seasons," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The results further corroborate the positive effect of falling mortgage rates on affordability, which we expect will help support a rebound in home sales."
"Continuing a five-month trend, the net share of consumers who believe mortgage rates will go down increased 7 percentage points amid a 35 basis-point drop in mortgage rates in March alone," continued Duncan. "Meanwhile, job confidence – little changed from last month's survey high – also continues to support housing sentiment, while income growth perceptions firmed from both prior month and year-ago levels, potentially supporting an uptick in housing demand. Additionally, consumers appear to have regained some confidence in the housing market, with perceptions of both home buying and home selling conditions returning to their longer-term trends."