Fannie Mae Home Purchase Sentiment Index® Declines for Second Consecutive Month

According to the Fannie Mae Home Purchase Sentiment Index® (HPSI), consumer confidence in home-buying and home-selling declined from November’s reading of 80.0 to a reading of 74.0 in December. The HPSI is now at its lowest level since May 2020. December’s decline markets the second straight month of HPSI declines, with five of the six HPSI components declining month over month. Year over year, the HPSI is down 17.7 points. In remarks prepared for the release of the HPSI, Doug Duncan, Fannie Mae Senior Vice President and Chief Economist, said, “Both the ‘Good Time to Sell’ and ‘Good Time to Buy’ components fell significantly, with respondents overwhelmingly noting the unfavourability of economic conditions. In particular, the sell-side component fell for the first time since April and by 18 points, reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes. If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales.”