As the market makes bold moves, Fannie Mae’s Home Purchase Sentiment Index® (HPSI) increased 3.3 points to 86.5 in July, reaching a new all-time survey high and indicating a more positive outlook in the housing market-specific HPSI components. Each of the six HPSI components increased in July. The largest increases were seen in the net share of consumers who expect home prices to go up over the next 12 months, which rose 8 percentage points after a drop in June, and the net share of consumers who expect mortgage interest rates to go down over the next 12 months, which rose 5 percentage points. The Household Income component also rebounded after dropping in June, rising 3 percentage points to 11 percent. Notably, the share of consumers who said they would buy if they were going to move increased to 67 percent, while the share of consumers who said they would rent moved down to 26 percent, equaling an all-time National Housing Survey® low.
“The HPSI reached a new survey high in July, but enthusiasm should be tempered because the increase only returns the index to a very gradual upward trend,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers. Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.”
Continuing the increase from June, the net share of Americans who say it is a good time to buy a house rose by 1 percentage point to 33 percent. The net percentage of those who say it is a good time to sell a house rose 2 percentage points in July to 20 percent – reaching a new survey high for the second consecutive month. A survey high and low were reached for those who think it is a good time and bad time to sell, respectively.
The net share of Americans who say that home prices will go up recovered from a drop in June, rising 8 percentage points to 41 percent. The net share of those who say mortgage rates will go down over the next twelve months rose 5 percentage points to negative 36 percent, continuing the overall upward trend since the start of 2016.
The net share of Americans who say they are not concerned with losing their job rose 1 percentage point to 69 percent. The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 3 percentage points to 11 percent after June’s sharp decline.
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