Signs of moderation in home price expectations

The Fannie Mae Home Purchase Sentiment Index^® (HPSI) was largely unchanged in August, decreasing 0.1 points to 75.7, as survey respondents tempered both their recent pessimism about home-buying conditions and their upward expectations of home price growth.

Overall, three of the index’s six components increased month over month, while the other three decreased. Most notably, a greater share of consumers believes it’s a good time to buy a home – though that population remains firmly in the minority at only 32 percent – while the ongoing plurality of respondents who expect home prices to go up over the next 12 months declined to 40 percent, down from last month’s 46 percent but still well above the 24 percent of consumers who believe home prices will decline. Year over year, the full index is down 1.8 points.

“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.

Home Purchase Sentiment Index – Component Highlights

Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in August by 0.1 points to 75.7. The HPSI is down 1.8 points compared to the same time last year. Read the full research report for additional information.  

• Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home increased from 28% to 32%, while the percentage who say it is a bad time to buy decreased from 66% to 63%. As a result, the net share of those who say it is a good time to buy increased 7 percentage points month over month.
• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 75% to 73%, while the percentage who say it’s a bad time to sell decreased from 20% to 19%. As a result, the net share of those who say it is a good time to sell decreased 1 percentage point month over month.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 46% to 40%, while the percentage who say home prices will go down increased from 21% to 24%. The share who think home prices will stay the same increased from 27% to 31%. As a result, the net share of Americans who say home prices will go up decreased 9 percentage points month over month.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 5% to 6%, while the percentage who expect mortgage rates to go up decreased from 57% to 53%. The share who think mortgage rates will stay the same increased from 31% to 35%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 5 percentage point month over month.
• Job Concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 84% to 82%, while the percentage who say they are concerned increased from 13% to 15%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 4 percentage points month over month.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 27% to 26%, while the percentage who say their household income is significantly lower decreased from 14% to 12%. The percentage who say their household income is about the same increased from 56% to 59%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 1 percentage point month over month.