Home Buying Sentiment Improves Slightly
Consumers
felt a little better about the wisdom of buying a home last month than
they did in July, although that isn't saying a lot. Fannie Mae says 32
percent of respondents to its August National Housing Survey (NHS) said
it was a good time to buy, up from 28 percent in July. Those who said it
was a bad time declined by 3 percentage points to 63 percent, leaving
net positive responses at a negative 31 percent, 7 points higher than
the prior month but down by 55 points year-over-year.
Seventy-three percent of those surveyed said it was a good time to sell,
but this was down from 75 percent in July and marked the second monthly
decline. Net positive responses declined to 54 percent, down 1 point
from July and 8 points compared to June.
The six questions from
the NHS that are used to construct the Home Purchase Sentiment Index
(HPSI) split evenly between gainers and losers last month and the Index
remained flat at 75.7, a 1 point dip from July, and 1.8 points lower
than in August 2020.
In addition to the
slight increase in consumer sentiment about home buying, there were also
more positive answers regarding expectations for mortgage rates
and reported household income. The percentage of respondents who say
mortgage rates will go down in the next 12 months increased from 5
percent to while 53 percent expect higher rates and 35 percent
anticipate no change. As a result, those expecting lower rates increased
from a net of -58 percent to -53 percent.
The increase in the component reflecting household income was
due to a higher number of those reporting no change over the last 12
months, 3 points higher than in July at 59 percent. The number reporting
either lower or higher income declined only slightly leaving the net
"higher" income category at 14 percent, one point higher
month-over-month.
The two other components that moved lower during the month were expectations about home price increases and concerns over job security.
Forty-percent of respondents believe home prices will rise over the
next 12 months, 6 points fewer than the prior month, while there was a 3
point increase to 24 percent in those who expect a decline. Factoring
in the 31 percent (up 4 points) who expect no change and the net of
those expecting higher prices dropped 9 points from July.
Finally, 82 percent
of respondents said they are not concerned over losing their job in the
next 12 months, a 2 point decline. The share of those who are
concerned increased 2 points, leaving the net share of the unconcerned
down 4 points at 67 percent.
"The HPSI remained relatively flat
this month, suggesting to us that the continued strength of demand for
housing and favorable home-selling conditions may be offsetting broader
concerns about the Delta variant and inflation that have negatively
impacted other consumer confidence indices," said Mark Palim, Fannie Mae
Vice President and Deputy Chief Economist. "Most consumers continue to
report that it's a good time to sell a home - but a bad time to buy -
and they most frequently cite high home prices and a lack of supply as
their primary rationale. However, the 'good time to buy' component,
while still near a survey low, did tick up for the first time since
March, perhaps owing in part to the favorable mortgage rate environment
and growing expectations that home price growth will begin to moderate
over the next twelve months."
The National Housing Survey from
which the HPSI is constructed, is conducted monthly by telephone among
1,000 consumers, both homeowners and renters. In addition to the six
questions that are the framework of the index, respondents are asked
questions about the economy, personal finances, attitudes about getting a
mortgage, and questions to track attitudinal shifts.