Home Purchase Sentiment Index (HPSI) by Fannie Mae revealed its October report with a more optimistic view of both buying and selling homes but a lesser positive outlook on personal finances and employment.
What is a Home Purchase Sentiment Index?
HPSI is a composite index designed to track consumers’ housing-related attitudes, intentions, and perceptions, using six questions from the National Housing Survey (NHS).
What are the key components of HPSI?
- Buying Conditions
- Selling Conditions
- Home Price Outlook
- Mortgage Rate Outlook
- Job Loss Concern
- Change in Household Income
Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae said that until this day, the HPSI has recovered over 60% of its COVID-19 pandemic loss, reflecting the bright spot that the mortgage market has been in the economy.
Duncan said that while the market seems to be on the road to recovery, the evolution of the pandemic and the 2020 election outcomes may have longer-lasting and unexpected impacts on consumer sentiment, as we saw following the 2016 elections, and we expect both factors will shape the housing market over the coming months.
The HPSI result showed a spike of 7 basis-points for October. October result marked the third-consecutive month-to-month increase. Three components came back with a positive result while the other three showed a slightly negative activity.
Below is the summary of the HPSI for October, 2020.
- Good/Bad Time to Buy: Buyers feel that this is a good time to buy a house. The net share of Americans who say it is a good time to buy increased 9 percentage points month over month.
- Good/Bad Time to Sell: Sellers feel confident that this is a good time to sell. The net share of those who say it is a good time to sell increased 6 percentage points month over month.
- Home Price Expectations: Americans feel that the prices of houses will not increase in the next 12 months. The net share of Americans who say home prices will go up decreased 4 percentage points month over month.
- Mortgage Rate Expectations: Most people expect that the mortgage rate would either stay the same or will go down.
- Job Concerns: A lot of Americans are highly concerned about losing their jobs in the next 12 months.
- Household Income: Americans have agreed that their household income was a lot lower than it was in the past 12 months.
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